15-Year Property Explained
Fifteen-year property is mostly land improvements — paving, sidewalks, fencing, landscaping — plus qualified improvement property and certain retail motor fuels outlets. The class life band is 20 to under 25 years, with a few statutory additions. Buildings and parking garages stay out of class 00.3.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- Land improvements (class 00.3) have a 20-year class life, which makes them 15-year property.
- Qualified improvement property and qualifying retail motor fuels outlets are 15-year property by statute.
- Fifteen-year property uses 150% declining balance and is generally bonus-eligible.
- Qualified improvement property is the straight-line exception inside the 15-year class.
- Buildings and parking garages are not land improvements.
Section 168(e) makes property with a class life of 20 to under 25 years 15-year property. The main example in cost segregation is class 00.3, land improvements: sidewalks, roads, drainage, sewers other than municipal sewers, fences, landscaping, and shrubbery. IRS examiner matrices also place parking lots, including striping, curbs, and landscape islands, in this class.
The statute adds specific items. Section 168(e)(3)(E) includes qualified improvement property (interior improvements to nonresidential buildings meeting §168(e)(6)) and any §1250 property that is a retail motor fuels outlet, such as a qualifying gas station building.
Those statutory 15-year items are not class 00.3. QIP is an interior building improvement. A qualifying retail motor fuels outlet is a building that the statute pulls out of the 39-year class. Mixing those categories under one “site work” heading hides the legal reason for the period.
Because the recovery period is 20 years or less, 15-year property is generally bonus-eligible if the other §168(k) tests are met. As of October 16, 2026, the additional first-year allowance is 100% for qualified property acquired after January 19, 2025.
Do not treat every exterior cost as 15-year property. General grading is often land. Parking structures are buildings. Educational information, not tax advice.
The 15-year class is the usual home for site work in a cost segregation study, and it is also the home of QIP. Those two uses of the same recovery period have different legal reasons. A report that dumps both into one “15-year” total without saying which statute or class life applies is harder to review and harder to post.
What is not 15-year property
Buildings and their structural components are excluded from class 00.3. A parking garage is a building, not a land improvement. Some activity classes, such as 57.1 for service station land improvements, cover their own land improvements and also produce 15-year recovery.
Municipal sewers are excluded from the class 00.3 description in Publication 946. Off-site dedicated improvements can also fall outside the on-site land-improvement bucket depending on who owns them and what they serve. A sidewalk the owner built on its parcel is the ordinary 00.3 fact. A public main in the street is not the owner’s land improvement just because the project paid a connection fee.
Land itself is never 15-year property. Planting grass on raw land does not create a depreciable asset. Irrigation and plantings that would be destroyed with a related depreciable asset are the usual 00.3 landscaping facts in examiner matrices.
How it is depreciated
Fifteen-year property uses 150% declining balance switching to straight line, usually with the half-year convention. Qualified improvement property is the exception: it uses straight line. Both have recovery periods of 20 years or less and are generally eligible for bonus depreciation.
The mid-quarter convention can replace half-year if the year’s personal-property test is met. QIP is 15-year property, but it is still an improvement to real property; confirm the convention with your CPA for the year of placement.
ADS for land improvements is generally 20 years. ADS for QIP is 20 years. Property required to use ADS is not bonus-eligible.
Qualified improvement property
QIP is an improvement made by the taxpayer to an interior portion of a nonresidential building after the building was first placed in service. Enlargements, elevators and escalators, and internal structural framework are excluded.
The CARES Act technical correction made QIP 15-year property for improvements placed in service after December 31, 2017. As 15-year property, QIP can qualify for bonus depreciation. It does not apply to residential rental buildings.
Who made the improvement matters. Publication 946 describes QIP as improvements “made by you.” A tenant’s own interior work can qualify for the tenant. A landlord’s work is analyzed on who made it. Enlarging the building, adding an elevator, or altering internal structural framework takes that portion of the work out of QIP even if the rest of the interior qualifies.
Historical categories
Earlier law had separate 15-year categories for qualified leasehold, restaurant, and retail improvement property. Those apply only to property placed in service before 2018; qualified improvement property replaced them.
A look-back study of pre-2018 interior work has to use the category that existed in the placed-in-service year. Applying today’s QIP definition backward to 2016 work is the wrong statute. Designated change number 244 in the current automatic-change list is the QIP path for property placed in service after December 31, 2017, not a rewrite of earlier categories.
Retail motor fuels outlets and canopies
A building that meets the retail motor fuels outlet tests is 15-year §1250 property by statute. That is a building-life exception, not a land-improvement rule.
Rev. Rul. 2003-54 treated gasoline-pump canopies as 5-year personal property and their concrete footings as 15-year land improvements. The canopy and the building are different assets.
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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