MACRS
MACRS (Modified Accelerated Cost Recovery System) is the IRS depreciation method used for most tangible property placed in service after 1986, with specific recovery periods and conventions for different asset classes.
What it means
MACRS is the default depreciation system under IRC § 168. For real property: residential rental uses a 27.5-year straight-line schedule; commercial property uses a 39-year straight-line schedule. For personal property components (identified by cost seg): 5, 7, or 15 years with declining-balance methods.
MACRS has specific conventions — mid-month for real property, half-year or mid-quarter for personal property — that affect the first- and last-year calculations. Alternative Depreciation System (ADS) is an election that uses longer straight-line periods; it applies mandatorily to some electing real estate trades or businesses under the 2017 tax act.
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