Depreciation is the largest paper expense a rental owner gets to claim, and it is the same everywhere — 27.5 years, straight line, mid-month convention, federal law. What differs by state is how much the deduction is worth, because Virginia taxes wage income, so the deduction offsets state tax as well as federal. On a typical Virginia rental purchased near $410,000, the schedule below writes off $336,200 of building value and returns roughly $2,934 per year in tax savings at the assumed rate.
Virginia depreciation snapshot
| Purchase priceStatewide typical home value (Zillow) | $410,000 |
|---|---|
| Land shareTypical for the south — land is never depreciable | 20% |
| Depreciable basisPrice − land + capitalized closing costs | $336,200 |
| Annual depreciation1 ÷ 27.5 of the basis, straight line | $12,225 |
| First-year depreciationMid-month convention on a January start | $11,716 |
| Assumed combined tax rateVirginia state income tax included in the combined rate | 24% |
Home values: Zillow, September 2026. Income, rent, and property tax: U.S. Census Bureau ACS, 2024. Insurance is an estimate. Sources · How every state compares
The Virginia depreciation schedule
| Depreciable basis | $336,200 |
|---|---|
| Recovery period | 27.5 years (MACRS GDS) |
| Full-year depreciationHeadline result | $12,225 |
| Monthly deduction | $1,019 |
| First-year (mid-month) deduction | $11,716 |
| Annual tax savings at the assumed rateHeadline result | $2,934 |
| Total deducted over the recovery period | $336,200 |
Virginia-specific considerations
State income tax and the depreciation deduction
Virginia taxes wage income, so the deduction offsets state tax as well as federal. Set the combined rate slider to your actual federal + Virginia marginal rate; at 24% federal plus state, each dollar of depreciation can shelter a quarter or more of income.
Basis adjustments in Virginia
Localities set the tax rate, but a statutory reduction factor keeps assessments below recent sale prices; personal property tax on vehicles is billed separately. Those property taxes are deductible as operating expenses, not capitalized — but closing costs, attorney fees, and immediate improvements made in the first year do join the depreciable basis, which is why the example adds $8,200 of capitalized costs. State transfer taxes paid at closing also capitalise into basis.
Selling a Virginia rental
Depreciation taken — or "allowed or allowable," which includes depreciation you never claimed — is recaptured at up to 25% federal rate on sale. Virginia's treatment of that recapture varies; a 1031 exchange into another investment property defers both the capital gain and the recapture, which is why it is the standard exit for long-holding Virginia rental owners.
How to calculate your Virginia rental depreciation
- Confirm the property is placed in service (available for rent) — that starts the clock, and the mid-month convention means the first and last years claim partial months.
- Split the purchase price between land and building. The default uses 20% land for the Virginia market; an appraisal or county split is more accurate.
- Add closing costs and any immediate improvements to the basis — capitalized costs raise every future deduction.
- Set the month placed in service; the schedule re-dates the mid-month convention automatically.
- Set the combined federal + Virginia state marginal rate to estimate tax savings. Use your actual marginal rate, not the top bracket.
Methodology
Residential rental property recovers its depreciable basis over 27.5 years under MACRS GDS (IRS Publication 946, Table A-1): straight-line at 1/27.5 of the basis per full year, with a mid-month convention in the year placed in service — the first year claims half a month for the month of service, and the final stub year closes the schedule to exactly 100%.
Land is removed from basis before the schedule starts, because land does not wear out. The Virginia defaults use the statewide typical home value and a region-typical land share; substitute your appraisal and actual closing costs for a precise schedule.
Sources
- Typical home value: Zillow Home Value Index (all homes, mid tier, seasonally adjusted), September 2026.
- Median household income: U.S. Census Bureau, American Community Survey 1-year estimates, table B19013, 2024.
- Median gross rent: U.S. Census Bureau, American Community Survey 1-year estimates, table B25064, 2024.
- Effective property tax rate: Median real estate taxes paid (B25103) ÷ median home value (B25077), Census ACS 1-year, the Tax Foundation's method, 2024.
- Homeowners insurance: Keystone estimate of a typical annual premium. Replace it with a quote for the address, 2026.
Read the full methodology, worked example, and caveats in the national Rental Property Depreciation guide.
Virginia FAQ
- Does Virginia allow rental property depreciation?
- Yes — and so does every other state. Depreciation is a federal tax rule (MACRS, 27.5 years for residential rentals) that every landlord may claim regardless of where the property sits. What varies is the value: virginia taxes wage income, so the deduction offsets state tax as well as federal.
- How much rental property depreciation can I claim on a Virginia home?
- On the example above, $12,225 per year — the $336,200 depreciable basis ÷ 27.5 — worth about $2,934 in tax savings at a 24% combined rate. The first year claims $11,716 because the mid-month convention counts only part of the month placed in service.
- Is the depreciation deduction worth more in Virginia than in a no-income-tax state?
- Somewhat, yes. Because Virginia taxes wage income, each dollar of depreciation shelters federal plus state tax — set the combined rate slider to your actual marginal rate. A landlord in a no-income-tax state at the same federal bracket shelters less per dollar.
- What happens to depreciation when I sell my Virginia rental?
- It is recaptured: the IRS taxes depreciation taken (or allowable) at up to 25% federal rate when you sell at a gain. A 1031 exchange into another investment property defers both the gain and the recapture, which is the standard exit for long-term Virginia rental owners. State treatment of the recapture varies — confirm with a Virginia tax professional before filing.
Other state editions
Every state gets its own edition of the Rental Property Depreciation, preloaded with that market's typical values, tax rates, and insurance costs: