Real estate depreciation lets you deduct the cost of a building over its useful life — 27.5 years for residential property. Pre-filled with Hawaii median property value of $743,000.
Avg Cap Rate
4%
Median Price
$743K
Property Tax
0.31%
Vacancy Rate
7.4%
Local Factors
Annual Depreciation
$21,615
$1,801/mo
What does this mean?
You're getting meaningful tax savings from depreciation. This phantom expense reduces your taxable rental income without costing you anything out of pocket.
Depreciation is one of the most powerful tax benefits of owning rental property. The IRS allows you to deduct the cost of a building (not land) over its useful life — 27.5 years for residential and 39 years for commercial property.
This is called straight-line depreciation because you take equal deductions each year. It's a "paper loss" — your property might be appreciating while you claim it's losing value. That phantom expense offsets rental income and reduces your tax bill.
Keep running the numbers
Depreciation is the silent return in Hawaii. See how it compounds.