Illustrative MACRS Recovery-Period Comparison
A side-by-side of 5-, 7-, 15-, 27.5-, and 39-year treatment for typical buckets, without claiming any property mixes them in those shares. Educational information, not tax advice.
Educational information, not tax advice.
Updated 2026-10-14
Assumptions
- Educational information, not tax advice.
- No mix percentages are implied. This is a teaching table of classes, not a result and not a typical property.
- Recovery period follows class under §168 and Publication 946, not the study brand.
- Any dollar figures below are invented for arithmetic only.
Key takeaways
- Recovery period follows class, not the study brand. 27.5 versus 39 is a building-definition question under §168(e)(2).
- 7-year often comes from an activity class or from office furniture (class 00.11), not from “furniture versus fixture.”
- Personal property usually uses the half-year convention, unless mid-quarter applies. Real property uses mid-month. Mixing them in one year is normal.
- “Short-life” is not one number. Casino gaming-area electrical can be 7-year class 79.0 while guest-room furniture is 5-year class 57.0.
A teaching table, not a result: appliances and many retail fixtures — 5-year class 57.0; some recreation and manufacturing activity classes — 7-year; land improvements — 15-year; residential rental buildings — 27.5-year; nonresidential buildings — 39-year.
Casino gaming-area electrical in the IRS matrix uses 7-year class 79.0, while guest-room furniture uses 5-year class 57.0. That is why “short-life” is not one number. Suppose, for arithmetic only, five invented $1 lines, one in each recovery period. Those $1 lines do not imply a mix. They exist so a reader can see that class, method, and convention differ even when cost is identical.
Order of operations still starts with land versus depreciable basis, then building class, then site work, then personal property. This page zooms in on what happens after class is chosen: GDS period, method, convention, and why two personal-property lines can still depreciate differently.
Conventions
Personal property usually uses the half-year convention, unless mid-quarter applies. Real property uses mid-month. Mixing them in one year is normal and is not an error. Mid-quarter applies, generally, when more than 40% of the aggregate bases of property to which the convention applies is placed in service in the last three months of the tax year. Buildings do not go into that test.
A $1 of 5-year property placed in service in January and a $1 of 5-year property placed in service in December can therefore receive different first-year fractions if mid-quarter is triggered. The study should date the assets. The CPA applies the convention on Form 4562. This page does not compute the fraction.
Five-year and seven-year buckets
Section 168(e) maps class life to recovery period. Property with a class life of 4 to under 10 years is 5-year property. Appliances and many retail fixtures sit in class 57.0 (disposable property used in wholesale or retail trade, or certain personal property used in a personal-service activity, as that class is described in the tables). They generally use 200% declining balance switching to straight line.
Property with a class life of 10 to under 16 years is 7-year property. Office furniture, fixtures, and equipment (class 00.11) is the familiar example. Several activity classes also produce 7-year recovery, including class 79.0 (recreation). Personal property with no assigned class life defaults to 7 years. Check the asset class, then the activity class, before defaulting. Rev. Rul. 2003-81 is the procedure reminder.
Fifteen, 27.5, and 39
Class 00.3 land improvements have a 20-year class life, which makes them 15-year property, generally 150% declining balance. Qualified improvement property is 15-year by statute and uses straight line. Qualifying retail motor-fuels outlets are also 15-year buildings — a statutory exception, not a paving class.
Residential rental property under §168(e)(2)(A) — 80% dwelling-unit income, excluding transient lodging — is 27.5-year, straight line, mid-month. Nonresidential real property is 39-year, straight line, mid-month. A clubhouse on an apartment campus can be 39-year while the dwellings are 27.5. Getting that split wrong swamps any appliance line.
ADS, bonus, and recapture context
Taxpayers who must use ADS — for example, an electing real property trade or business under §163(j) — use longer periods (30-year residential after 2017, 40-year nonresidential, 20-year QIP). ADS does not change whether an item is personal property; it changes the period. Bonus depreciation under §168(k) generally requires a recovery period of 20 years or less, so 27.5- and 39-year buildings are not bonus-eligible as buildings. QIP and 15-year land improvements can be.
Relabeling a component as §1245 property can increase future ordinary recapture under §1245 if the property is sold. That is a reason to classify carefully, not a reason to refuse a supported class. This page states no recapture rate. Educational information, not tax advice.
What a comparison is not
It is not a claim that a typical property is 20% 5-year, 10% 15-year, and the rest building. No mix percentages are implied (F-19). AmeriSouth is the caution against exploding a residential building to manufacture short-life lines. Matrices are examiner guidance and may not apply outside their industry.
The CPA files Form 4562 using the classes the study supports. CostSeg SI does not claim an operational classification agent that assigns periods without a person.
Sources
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- 2IRS Publication 946 — How To Depreciate Property (2025)(opens in a new tab)
Appendix B reproduces the Rev. Proc. 87-56 class lives.
- 3IRS Publication 5653 — Cost Segregation Audit Techniques Guide (rev. 2-2025)(opens in a new tab)
Written for IRS examiners. The guide states it is not an official pronouncement of law and cannot be cited as authority. It predates the July 2025 law.
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