5-Year Property Explained
Five-year property includes computers, many assets used in retail and service businesses, and personal property in rental housing such as appliances and carpet. The class comes from a class life of more than 4 but less than 10 years, not from a rule that every fixture in a building is 5-year property.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- Property with a class life of more than 4 but less than 10 years is 5-year property.
- Asset class 57.0 (distributive trades and services) places much of the personal property in retail, restaurant, and rental settings in the 5-year class.
- Five-year property uses the 200% declining-balance method and is generally bonus-eligible.
- Publication 527 lists appliances, carpets, and furniture used in residential rental property as 5-year property.
- The same type of item can fall in a different class in a different industry.
Under §168(e), property with a class life of more than 4 years but less than 10 is 5-year property. Common examples in Publication 946's class tables include information systems such as computers and peripherals (class 00.12), and assets used in wholesale and retail trade and in personal and professional services (class 57.0, class life 9 years).
Class 57.0 is why so many cost segregation components in stores, restaurants, and service businesses end up as 5-year property. IRS examiner matrices place retail fixtures, food preparation equipment, kitchen equipment hook-ups, and decorative millwork in this class for those industries.
The statute also lists specific 5-year items, including automobiles and light general-purpose trucks, qualified technological equipment, and certain research property. Those statutory assignments sit alongside the class-life map. They do not turn a building’s walls or central HVAC into 5-year property.
Five-year recovery uses 200% declining balance switching to straight line, usually with the half-year convention, so deductions run over six tax years. The recovery period is 20 years or less, so the property is generally eligible for bonus depreciation if the other qualified-property rules are met.
Do not read class 57.0 as a blanket for every item inside a store or apartment. Structural components stay with the building. Educational information, not tax advice.
In rental housing
Publication 527 lists appliances, carpets, and furniture used in residential rental property as 5-year property. The IRS residential rental matrix also treats dedicated appliance circuits and plumbing hook-ups, removable floor coverings such as carpet and vinyl, and data cabling serving non-structural equipment as 5-year items, while general kitchen wiring, cabinets, and counters stay with the building.
That matrix is examiner guidance for residential rentals. It is not a holding that every floor covering in every building is 5-year property. Permanently adhered finishes and ceramic tile are often treated as part of the building on the facts.
Furniture and appliances that the owner places in the unit are usually the straightforward 5-year items. Cabinetry built into the kitchen is the item the residential matrix keeps with the 27.5-year building. AmeriSouth shows how an apartment study can fail when it treats too much interior finish as personal property.
How it is depreciated
Five-year property uses 200% declining balance switching to straight line, usually with the half-year convention, so deductions run over six tax years. It has a recovery period of 20 years or less, so it is generally eligible for bonus depreciation, which as of October 16, 2026 is 100% for qualified property acquired after January 19, 2025.
Property acquired after September 27, 2017 and before January 20, 2025 follows the earlier phase-down if it is otherwise qualified. A written binding contract signed before the January 20, 2025 cutoff can keep later-delivered property on that older schedule.
Used 5-year property can be bonus-eligible if the taxpayer did not previously use it and the acquisition meets the related-party and purchase rules in §168(k). Property required to use ADS does not qualify.
A caution
The class depends on the asset and the activity it is used in. The same type of item can land in a different class in a different industry, and the matrices themselves say they reflect one industry's general fact pattern.
A lessor generally uses the activity class of the lessee’s use. Equipment that is 5-year property in a retail tenant’s space is not automatically 5-year property if the same hardware is used in a manufacturing activity with a different class life.
Office computers are usually class 00.12, which is 5-year property in any business. Office furniture is class 00.11, which is 7-year property. Mixing those two classes is a common schedule error.
What does not become 5-year property
Walls, roofs, central HVAC, general building wiring, restroom plumbing, elevators, and sprinklers are listed as structural components. Putting them in class 57.0 because they are inside a store does not change that list.
Qualified improvement property is 15-year property, not 5-year, even though it is interior work in a nonresidential building. Land improvements are 15-year under class 00.3. Those shorter-than-building classes are still not 5-year classes.
Recapture
Five-year components are generally §1245 property. On sale, gain up to prior depreciation is ordinarily recaptured as ordinary income. That is a character rule, not a reason to leave a qualifying appliance in the building class.
That recapture is the trade-off for earlier deductions. It is a reason to model an exit with your CPA rather than treating every 5-year dollar as free timing.
Sources
- 1
- 2IRS Publication 946 — How To Depreciate Property (2025)(opens in a new tab)
Appendix B reproduces the Rev. Proc. 87-56 class lives.
- 3
- 4IRS 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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