Reference library
Depreciation, in more detail than you probably wanted
Recovery periods for every asset class, the current bonus depreciation rules, the conventions that decide your first-year number, and the exit consequences nobody mentions until closing.
Bonus depreciation
100% is permanent again for property acquired and placed in service after 19 January 2025. What that changed, what the transition election does, and how it interacts with a study.
Read the guide →MACRS asset classes
The full recovery-period reference: every general asset class, the statutory real property classes, ADS lives, methods and conventions.
Read the guide →Qualified improvement property
15-year life, full bonus eligibility, and the retroactive fix that a lot of 2018 and 2019 schedules never received.
Read the guide →Land improvements
The single most under-claimed category in real estate. What counts, what does not, and why paving is not land.
Read the guide →Section 179 vs bonus
$2.56 million cap versus no cap, income limitation versus none, and the ordering rules that decide which to elect first.
Read the guide →Depreciation recapture
Section 1245 versus 1250 on exit, the 25% unrecaptured gain rate, and how acceleration changes the sale math.
Read the guide →The three questions that set every depreciation number
Strip away the complexity and depreciation reduces to three inputs. Everything else is elaboration.
1. What is the basis?
Cost, plus capitalized acquisition costs, less the portion allocated to land. Land is never depreciable, which makes the land allocation the highest-leverage number on the schedule — and one that frequently gets set by copying a ratio off the county tax assessment without further thought.
2. What is the recovery period?
Set by the asset class the property falls into. Most tangible assets map to a class in Rev. Proc. 87-56; real property recovery periods are set by statute. Property with no class life defaults to 7 years under GDS. This is the question a cost segregation study exists to answer correctly, component by component.
3. What method and convention apply?
5 and 7-year property generally uses 200% declining balance switching to straight line. 15 and 20-year property uses 150% declining balance. Real property is always straight line. Conventions determine how much of the first year you get: half-year for most personal property, mid-quarter if more than 40% of the year's additions land in the fourth quarter, and mid-month for all real property.
No-cost feasibility review
Find out what your building is hiding.
A feasibility review is free and takes about twenty minutes. Bring the closing statement and the depreciation schedule; we will tell you plainly whether a study pays for itself.