Property-Type Guide Index

How to start a property-type page

Begin with the recovery period of the building itself. Under §168(e)(2), a building is residential rental property only if 80 percent or more of its gross rental income is from dwelling units. A dwelling unit is a house or apartment used to provide living accommodations, excluding a unit in a hotel, motel, or other establishment more than half of whose units are used on a transient basis. Publication 527 walks through that test for rental owners. If the test fails, the building is nonresidential real property recovered over 39 years. Hotels, most motels, and many mixed-use buildings fail it. Apartments, many single-family rentals, and condominiums held as rentals often meet it, but short-term or transient use can change the result.

Then ask whether Chapter 7 of Publication 5653 has a matrix for that industry. If it does, read the matrix’s own limits: it reflects general fact patterns for that industry and may not be applicable to other industries. If a return matches the matrix, the Audit Techniques Guide tells examiners they generally should not adjust lives or categories. If the building is an office, a medical clinic, a warehouse, a self-storage facility, a data center, or a stand-alone convenience store, say so on the page: there is no matrix, and any borrowed row is an analogy.

Finally, list the component buckets that actually appear in that property type — appliances and removable floor covering in a rental; kitchen equipment and dedicated hook-ups in a restaurant; guest-room furnishings in a hotel; process electrical in a plant — and send the reader to the asset-library pages for the tests. Do not invent a typical reclassification percentage. This library has no verified savings statistics.

Guides in this library

Residential: single-family rentals, multifamily, condominiums and townhomes, build-to-rent, student housing, senior living, and assisted living. The residential-rental matrix in Chapter 7.H is the examiner document that actually names houses, condominiums, and apartments. Student housing, senior living, and assisted living still have to pass the 80 percent dwelling-unit test. This library flags the care-fee and transient-use questions as fact-dependent because no IRS matrix row decides them.

Hospitality and food: hotels and resorts, motels and extended stay, restaurants and fast food. Restaurant assets have their own Chapter 7.C matrix, including kitchen equipment, dedicated hook-ups, and a statement that allocation of central HVAC is not appropriate. Hotel assets appear inside the casino-and-hotel matrix in Chapter 7.E. Applying that matrix to a non-casino hotel is an analogy and is labeled that way on the hotel page. Transient-use rules generally put hotels on a 39-year building life.

Commercial: office, medical, retail, shopping centers, warehouses, distribution centers, self-storage, mixed-use, parking structures. Retail and shopping-center pages can use the Chapter 7.B retail matrix for fixtures, removable floor covering, and site work. Office, medical, warehouse, self-storage, and data-center pages cannot. Parking structures are buildings under Treas. Reg. §1.48-1(e)(1) and Chapter 8.B of the Audit Techniques Guide; surface lots are class 00.3 land improvements.

Specialty: manufacturing, automotive dealerships, auto repair, gas stations and convenience stores, data centers, specialty and recreational properties. Automobile dealerships and automobile manufacturing have matrices. Gas-station buildings may be 15-year property if they meet the retail-motor-fuels-outlet tests in §168(e)(3)(E); that is a statutory test, not a Chapter 7 matrix. Canopies and canopy footings are addressed in Rev. Rul. 2003-54, which this library cites on the gas-station page rather than inventing a matrix row.

How to read a matrix row

If a return matches the matrix, the Audit Techniques Guide tells examiners they generally should not adjust lives or categories. The same row says it may not apply to other industries. Carpet in the restaurant matrix is not, by itself, carpet in an office. Permanently adhered VCT in the pharmaceutical matrix is not, by itself, VCT in a retail store. The restaurant matrix treats restaurant carpeting as not permanent; the pharmaceutical matrix treats some adhered floor covering as a structural component. Those two rows can both be right on their facts and still be the wrong citation for a third building.

Read the recovery class and the §1245 / §1250 column as examiner guidance for that industry’s general pattern. Then read the legal test that actually decides the class: function and permanence under Treas. Reg. §1.48-1 and Whiteco, functional allocation under Scott Paper for electrical, and the sole-justification exception for certain process HVAC. A matrix row that says “57.0 – 5 yr” is pointing at Rev. Proc. 87-56 class 57.0 as reproduced in Publication 946 Appendix B, not at a CostSeg SI table.

Do not import a restaurant kitchen-HVAC row into an office, and do not import a casino guest-room furniture row into a warehouse. If a property-type page uses a nearby matrix as an analogy — for example, a hotel restaurant pointing at the restaurant directive, which Chapter 7 itself allows for restaurant assets inside an apartment building — the page must say that it is an analogy. That sentence is part of the method, not a disclaimer afterthought.

What the property guides will not do

They will not pick a study fee, a reclassification percentage, or a bonus-depreciation dollar result. They will not treat Publication 5653 as current bonus-depreciation law. They will not collapse senior living, assisted living, and student housing into a single 27.5-year label without the dwelling-unit test. They will not treat Super Intelligence screens as if they had inspected the building.

They are educational maps for owners and CPAs who want to see which official document, if any, speaks to that property type. Classification of any actual component still depends on the drawings, the inspection, the cost records, and professional judgment.