42.4 MACRS Recovery Periods

Depreciable assets other than buildings fall within a three-, five-, seven-, 10-, 15-, or 20-year recovery period under the general depreciation system (GDS).

Straight-line recovery for buildings is claimed over a period of 27.5 years for residential rental property or 39 years for nonresidential real property (42.13).

Note: The actual write-off period of depreciation for an asset is one year longer than the class life because of the convention rules (42.5–42.7).

Three-year property.

This class includes property with a class life of four years or less, other than cars and light-duty trucks, which are in the five-year class.

This class includes: special handling devices for the manufacture of food and beverages; special tools and devices for the manufacture of rubber products; special tools for the manufacture of finished plastic products, fabricated metal products, or motor vehicles; and breeding hogs. By law, racehorses of any age and other horses more than 12 years old when placed in service are also in the three-year class.

Five-year property.

This class includes property with a class life of more than four years and less than 10 years such as computers (42.10), typewriters, copiers, duplicating equipment, heavy general-purpose trucks, trailers, cargo containers, and trailer-mounted containers. Also included by law in the five-year class are cars, light-duty trucks (actual unloaded weight less than 13,000 pounds), taxis, buses, computer-based telephone central office switching equipment, computer-related peripheral equipment, semiconductor manufacturing equipment, and property used in research and experimentation. These leasehold improvements eligible for a five-year recovery period must be depreciated using the straight-line method.

Planning Reminder

Recovery Periods

The depreciation recovery periods for different types of assets are generally fixed by law according to the rules on this page.

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Seven-year property.

This class includes any property with a class life of 10 years or more but less than 16 years. This is also a catch-all category for assets with no class life that have not been assigned by law to another class. Included in the seven-year class are: office furniture and fixtures, such as desks, safes, and files; cellular phones; fax machines; refrigerators; dishwashers; and machines used to produce jewelry, musical instruments, toys, and sporting goods.

Ten-year property.

This includes property with a class life of 16 years or more and less than 20 years, such as vessels, barges, tugs, and water transportation equipment, and assets used in petroleum refining or in the manufacture of tobacco products and certain food products. The 10-year class also includes single-purpose agricultural and horticultural structures, and trees or vines bearing fruit or nuts.

Fifteen-year property.

This includes land improvements such as fences, sidewalks, docks, shrubbery, roads, and bridges. It also includes other property with a class life of 20 years or more but less than 25 years, such as municipal sewage plants and telephone distribution plants. Gas station convenience stores are in the 15-year class if the property is no more than 1,400 square feet, or at least 50% of the floor space is devoted to selling petroleum products, or at least 50% of revenues are from petroleum sales. The owner of the gas station property does not have to be the operator of businesses on the property.

Twenty-year property.

This class includes property with a class life of 25 years or more, such as farm buildings and municipal sewers, except that residential and nonresidential real estate is excluded (42.13).