Real Estate Tax Calc
What Form 4562 does
Form 4562, Depreciation and Amortization, is where you report depreciation deductions, any Section 179 expensing, and bonus depreciation. For rental property, the depreciation total ultimately flows onto Schedule E, which reports rental income and expenses.
When you have to file it
You must file Form 4562 in the first year you place an asset in service, and in any year you add a new depreciable asset, claim Section 179, or claim bonus depreciation. In later years with no new assets, you often do not need to attach it again — the depreciation still appears on Schedule E.
Listed property and records
Part V covers listed property such as vehicles used for the rental business, which carries stricter substantiation rules. Keep an asset schedule showing each item, its basis, placed-in-service date, method, and accumulated depreciation — you will need it at sale to compute recapture.
The parts of Form 4562, briefly
The form is organized by the type of deduction. Part I handles Section 179 expensing (rarely used for the building itself, but relevant for qualifying equipment or certain nonresidential improvements). Part II reports special (bonus) depreciation. Part III is the main MACRS section, where the building shell and shorter-life components are entered by class and recovery period. Part IV is a summary that totals everything, and Part V covers listed property such as vehicles.
For a typical rental, the building goes on the Part III line for 27.5-year residential (or 39-year nonresidential) property using the straight-line method and mid-month convention. Appliances, carpeting, and other 5-year items go on the 5-year line; land improvements on the 15-year line. If a cost segregation study reclassified components, each class is entered on its own line, and any bonus depreciation on those components flows through Part II.
How the numbers flow to Schedule E
Form 4562 is a supporting worksheet, not the place the deduction lands. The total depreciation it computes flows to Schedule E, line 18 ("Depreciation expense or depletion"), where it reduces your net rental income or increases your rental loss. That net figure then carries to Schedule 1 and onto your Form 1040.
If you own multiple rentals, each property has its own Schedule E column, and depreciation for all of them can be summarized. Many preparers attach a single Form 4562 in a year new assets are added and keep a detailed depreciation schedule (often a software-generated worksheet) that itemizes every asset across every property. That worksheet — not the 1040 — is your permanent record of accumulated depreciation.
When you must attach it — and when you can skip it
You are required to file Form 4562 for a given activity in any year you: place new depreciable property in service, claim a Section 179 deduction, claim bonus (special) depreciation, or report depreciation on listed property (such as a vehicle). In a quiet year with no new assets and no listed property, you generally do not re-attach Form 4562 — the ongoing depreciation still appears on Schedule E line 18, computed from your depreciation schedule.
This is why many landlords file Form 4562 in year one and then only occasionally thereafter — when they buy another property, add a major improvement, or place new appliances in service. Even in years you do not attach the form, keep updating your underlying asset schedule so the accumulated total stays accurate.
Listed property and the vehicle trap
Part V covers listed property — assets that lend themselves to personal use, most commonly vehicles used partly for the rental business. Listed property carries stricter substantiation rules: you must document business-use percentage with a mileage log or equivalent records, and if business use drops to 50% or less, accelerated depreciation and bonus can be disallowed or recaptured.
For most buy-and-hold landlords, a vehicle is the only listed property they encounter, and many find the standard mileage rate simpler than depreciating the vehicle on Form 4562. If you do depreciate a vehicle, be meticulous with the log — this is a frequently examined area, and weak records can cost you the deduction and trigger recapture of prior-year bonus depreciation.
A filled-in example
Say you buy a residential rental in 2025 for $340,000, allocate $68,000 to land, and place $10,000 of new appliances in service. On your 2025 Form 4562: the $272,000 building goes on the Part III 27.5-year line (straight-line, mid-month), producing a partial first-year deduction based on the placed-in-service month; the $10,000 of appliances goes on the 5-year line, and — with 100% bonus depreciation restored for property placed in service after January 19, 2025 — the full $10,000 can be reported as special depreciation in Part II.
The form totals these in Part IV, and the combined depreciation flows to Schedule E line 18. In 2026, if you add no new assets, you likely will not re-attach Form 4562, but the building's roughly $9,891 annual deduction ($272,000 ÷ 27.5) continues on Schedule E from your depreciation schedule.
Recordkeeping you will need at sale
The depreciation schedule behind Form 4562 is not just for annual filing — it is the document that computes your tax when you sell. At disposition you need the total accumulated depreciation across the entire holding period to calculate adjusted basis and depreciation recapture (unrecaptured Section 1250 gain taxed at up to 25%, plus any ordinary-rate Section 1245 recapture on personal-property components).
Keep every year's Form 4562, the underlying asset-by-asset schedule, purchase and improvement receipts, and the land/building allocation support for as long as you own the property plus the statute of limitations after sale. Reconstructing years of depreciation after the fact is painful; maintaining the schedule contemporaneously is far easier and protects the deductions if the IRS ever asks.
Common Form 4562 mistakes
The recurring errors: (1) rolling appliances and land improvements into the 27.5-year building line instead of their own shorter-life classes, forfeiting faster depreciation; (2) using a 39-year life for a residential rental (that is the commercial figure); (3) forgetting to file the form in a year you add assets or claim bonus/Section 179; (4) weak listed-property records that jeopardize a vehicle deduction; and (5) never claiming depreciation at all — which does not avoid recapture, since it is based on depreciation allowed or allowable, and is corrected through Form 3115 rather than by amending returns.
Multiple properties and multiple activities
If you own several rentals, how you present them on Form 4562 and Schedule E depends on how the activities are organized. Each property gets its own Schedule E column for income and expenses, and depreciation for each flows to line 18 of that column. You do not need a separate Form 4562 per property; a single form (in a year one is required) can summarize the new assets across your portfolio, backed by a detailed depreciation worksheet that itemizes each asset by property.
Investors who make a grouping election to treat multiple rentals as a single activity (relevant for the passive activity and real-estate-professional rules) still depreciate each property's assets on their own schedules — grouping affects loss usage, not the mechanics of depreciation. Whatever the structure, the underlying asset schedule is the backbone: it should let you produce, for any property, its basis, placed-in-service date, method, convention, and accumulated depreciation on demand.
Software, preparers, and doing it right
Most landlords do not fill in Form 4562 by hand — tax software or a preparer generates it from the asset details you enter (cost, placed-in-service date, property type). The value you add is accuracy at data entry: correctly splitting land from building, classifying appliances and land improvements into their shorter-life classes rather than the 27.5-year line, and recording the true placed-in-service date so the mid-month (building) and half-year (personal property) conventions apply correctly.
Because the form drives both your annual deduction and your eventual recapture, errors compound over years. It is worth reviewing the first-year Form 4562 (and the depreciation schedule behind it) carefully, or having a professional set it up, so the classifications are right from the start. Fixing a years-old misclassification later means a Form 3115 accounting-method change — more work than getting it right initially.
Frequently asked questions
Do I file Form 4562 every year?
Only in years you place new assets in service or claim Section 179 or bonus depreciation. Otherwise depreciation continues on Schedule E without re-attaching it.
Where does the depreciation go?
The total from Form 4562 flows to Schedule E as a rental expense against your rental income.
What if I forgot to depreciate?
You may be able to catch up missed depreciation with Form 3115, since the IRS treats not claiming allowable depreciation as an accounting method issue.
Which part of Form 4562 does my rental building go on?
Part III (MACRS), on the line for 27.5-year residential rental property (or 39-year nonresidential), using the straight-line method and mid-month convention. Shorter-life components like 5-year appliances and 15-year land improvements go on their own class lines, and any bonus depreciation flows through Part II.
Do I need Form 4562 if I only have a vehicle for my rental?
A vehicle is listed property reported in Part V, so yes — using a vehicle for the rental generally requires Form 4562 and a mileage log, unless you use the standard mileage rate and have no other new assets. Business use of 50% or less can disallow accelerated depreciation and trigger recapture.
Where do I find my accumulated depreciation for a sale?
From your depreciation schedule — the asset-by-asset worksheet behind Form 4562 — which tracks the running total from the placed-in-service date. You need that cumulative figure to compute adjusted basis and depreciation recapture when you sell.
Do I need a separate Form 4562 for each rental property?
No. Each property has its own Schedule E column, but a single Form 4562 (in a year one is required) can summarize new assets across your portfolio, supported by a detailed depreciation worksheet that itemizes each asset by property. That worksheet is your permanent record.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.