Typically, rental property depreciates at a rate of about 3.6% for 27.5 years for residential properties.
You must determine the total cost value of the property, including the buying and closing costs and any home improvements, when calculating depreciation. Since land is not depreciable, investors are required to separate the property value from the value of the land.
Don't start depreciation until the property is ready to be rented out.
For example, a real estate investor who purchases a residential property valued at $200,000 determines the depreciation amount by dividing $200,000 by 27.5, which comes to nearly $7,272, of a tax deduction.
Depreciation has to be claimed within a year, otherwise you will miss the opportunity for tax benefits. You either "use it or lose it."