IRS Depreciation Guidelines Type of property Number of years allowed Land 0.0 Residential property 27.5 Nonresidential property 39.0 Eileen's Real Estate - Depreciation and Tax Consequences Eileen invested $450,000 in real estate ($382,500 for an apartment building and $67,500 for the land). The property enjoys full occupancy; tenants include families, students, and seniors. Eileen can deduct in depreciation per year on her taxes. in taxes by Eileen's rental income in the first year of ownership was $54,000. By occupying the 25% income tax bracket, she will save taking the depreciation deduction. Lei's Real Estate - Depreciation and Tax Consequences Lei invested $700,000 in real estate ($525,000 for an office building and $175,000 for its land). The property enjoys full occupancy; tenants include an assortment of businesses. Lei can deduct in depreciation from her taxes. By the end of her first year of ownership, Lei earned $105,000 in rental income. If she pays income taxes at the rate of 25%, then she will save in taxes by taking the depreciation deduction. Amy's Real Estate - Depreciation and Tax Consequences Amy purchased 10 acres of land in the country for $200,000 as an investment. She leases the property to a local nature club whose members use it for hiking and bird watching. As a result, Amy can deduct in depreciation from her taxes. If the gross annual rental income on Amy's property is $20,000 and she is taxed at the marginal rate of 25%, then she will be able to save on her taxes as a result of the depreciation deduction