What Is Appliance Depreciation?

How Appliance Depreciation Works for Landlords

When you buy a new refrigerator for your rental unit, you cannot deduct the entire $1,200 cost in the year you bought it (well, you might be able to with Section 179, but more on that later). Instead, the IRS treats it as a capital asset that loses value over time. You spread the deduction over the appliance's depreciation schedule.

For most residential rental appliances, the depreciation period is 5 years under MACRS (Modified Accelerated Cost Recovery System). That means your $1,200 refrigerator generates roughly $240/year in depreciation deductions for 5 years (the actual amounts vary year to year under MACRS accelerated schedules).

This matters for your taxes. Depreciation reduces your taxable rental income, which reduces your tax bill. On a $1,200 appliance, if you are in the 24% tax bracket, the total tax savings over the depreciation period is about $288. Not life-changing, but across a portfolio of 10 units with multiple appliances each, depreciation adds up to thousands in annual tax savings.

Depreciation Schedules by Appliance

Here are the standard IRS depreciation schedules for common rental property appliances:

• Refrigerator: 5 years, average cost $800-$1,500
• Range/Oven: 5 years, average cost $500-$1,200
• Dishwasher: 5 years, average cost $400-$800
• Washer: 5 years, average cost $500-$900
• Dryer: 5 years, average cost $400-$800
• Microwave (built-in): 5 years, average cost $200-$500
• Garbage disposal: 5 years, average cost $150-$400
• Water heater: 5 years, average cost $1,200-$2,500
• Window AC units: 5 years, average cost $200-$500

Note: These are for appliances purchased separately from the property. Appliances that come with the property when you buy it are included in the building's 27.5-year depreciation schedule unless your CPA does a cost segregation study to break them out.

Section 179 and Bonus Depreciation

Here is where it gets interesting. Instead of spreading the deduction over 5 years, you may be able to deduct the full cost in the year of purchase using:

Section 179 deduction: Allows you to expense the full cost of qualifying appliances in the year you buy and place them in service. There are annual limits (over $1 million for 2026), but individual landlords rarely hit those limits. You must have enough rental income to offset the deduction.

Bonus depreciation: Allows a large first-year deduction on new (and sometimes used) assets. The percentage varies by year (check current tax law). This can be combined with regular depreciation for the remaining balance.

Talk to your CPA about which option is best for your situation. Section 179 is often the simplest for landlords buying individual appliances.

Real Example: Depreciation Impact on Taxes

You own a 4-unit building and replace appliances in Unit 2 this year: new refrigerator ($1,100), new range ($700), new dishwasher ($500). Total appliance cost: $2,300.

Standard 5-year depreciation: Year 1 deduction (MACRS 5-year, first year rate 20%): $460. Years 2-5: remaining $1,840 spread across 4 years. Tax savings at 24% bracket: about $552 total over 5 years.

Section 179 election: Year 1 deduction: full $2,300. Tax savings at 24% bracket: $552 in year 1 instead of spread over 5 years. Same total savings, but you get it all now.

For most landlords, Section 179 is the better choice because a dollar of tax savings today is worth more than a dollar of savings spread over 5 years. But there are situations (low income years, phase-out limits) where spreading it out works better.

Repair vs. Replace: The Financial Decision

Every time an appliance breaks, you face the repair-or-replace question. Here is a framework:

Replace if: Repair costs more than 50% of new appliance price, the appliance is past 75% of its expected lifespan, you have had 2+ repairs in the past year, or the appliance is inefficient (old models cost more to run).

Repair if: Repair cost is under $200, the appliance is less than 5 years old, it is a simple fix (thermostat, seal, hinge), and the appliance is otherwise in good condition.

Remember: a new appliance comes with a warranty (typically 1 year), tax depreciation benefits, better energy efficiency, and improved tenant satisfaction. Sometimes replacing is the smarter financial move even when repair is cheaper.

Common Mistakes

Not tracking appliance ages and costs. Keep a spreadsheet of every appliance: unit, type, brand, model, purchase date, cost, and warranty expiration. This helps you plan replacements and maximize tax benefits.

Buying consumer-grade for rentals. That fancy stainless steel fridge with the ice maker and touchscreen? It will break faster and cost more to repair in a rental. Buy mid-grade, reliable brands. Landlord favorites: basic GE, Whirlpool, or Frigidaire models. Function over style.

Not claiming depreciation. If you are doing your own taxes, make sure you are depreciating your appliances. Many DIY landlords miss this deduction because they do not know it exists. This is free money.

Mixing up repairs and capital expenditures. Fixing a dishwasher is a repair (fully deductible this year). Replacing a dishwasher is a capital expenditure (depreciated over 5 years or Section 179). Categorize them correctly on your taxes.

Frequently Asked Questions

How long do rental appliances last?

Typical lifespans in rental settings: Refrigerator 13-17 years, Range 13-15 years, Dishwasher 9-12 years, Washer 10-13 years, Dryer 13-15 years, Microwave 9-10 years. Rental units see heavier use than owner-occupied homes, so plan for the lower end of these ranges.

Can I depreciate used appliances?

Yes. If you purchase used appliances for your rental, you can still depreciate them over the standard 5-year MACRS schedule. The depreciable amount is what you paid for them, not their original retail price. Section 179 may also apply to used purchases.

Should I provide appliances in my rental?

In most markets, providing at least a refrigerator and range is expected (and often required by local code). Dishwashers, washers, and dryers are market-dependent. Providing appliances attracts more tenants and justifies higher rent, but you are responsible for maintenance and replacement. Weigh the rent premium against the ongoing costs.