Modified Accelerated Cost Recovery System (MACRS)
Term given to two depreciation systems defined by the Internal Revenue Service:
- The main system is called the General Depreciation System (GDS). Under GDS, most property is assigned to eight property classes based on their class lives. These property classes provide the recovery period to be used by establishing the number of years over which the basis of an item in a class is recovered.
- The Alternative Depreciation System (ADS) generally provides for a longer recovery period and uses only the straight line method of depreciation to figure your tax deduction.
Both systems establish conventions determining how many months property can be depreciated in the first year it is placed in service and in the year of disposition.
- 20-year property. This class includes property such as farm buildings.
- Residential rental property. This class is comprised of rental buildings or structures for which 80% or more of the gross rental income is from dwelling units. Examples are living in a house or apartment. It excludes hotels and motels. Residential rental property is depreciated over 27.5 years.
- Nonresidential real property. This class includes real property that is not residential rental property. This property is depreciated over 31.5 years.
Popular Real Estate Terms
To fulfill , complete, implement, perform, or carry out terms of an agreement including completing a signature on a contract and delivering a document to the intended party. ...
percentage of land that may be used productively to the total square footage of the land. For example, if total square footage is 40,000 but only 30,000 square feet may be built upon ...
Land that has poor income potential, usually used in an agricultural sense meaning that the land is untellable, has poor access, is extremely steep, has suffered serious erosion, is ...
Insurance protection for the replacement cost of damaged property. Thus, the accumulated depreciation is not subtracted in determining the amount of reimbursement. ...
Determines the ability of soil to absorb and draw down water. A percolation test is essential to determine the location of a drainage field for waste disposal. ...
An individual against whom a court has placed a financial judgment with a creditor. For example, a court determines that Cole owes Smith $2,000 and makes Cole a judgment debtor. ...
Person or business that obtains mortgages for others by finding suitable lenders. The mortgage broker sometimes deals with collections and disbursements. Typically the mortgage broker ...
Rights, interest, and benefits inherent in the ownership of real estate, as distinguished from personal property ...
Measure of central tendency that is a measure of the center of the data; also called an average. Mean and standard deviation are the two most widely used statistical measures that summarize ...
Have a question or comment?
We're here to help.