The straight line (SL) method, which spreads expenses evenly across an asset’s depreciable life.Time-based depreciation schedules under the Modified Accelerated Cost Recovery System (MACRS) include: There are two types of depreciation schedules: time-based and usage-based. Once you’ve found the category of each business asset, you then must choose a depreciation schedule. However, you can still depreciate buildings and other improvements to the land. Keep in mind that land itself isn’t depreciable. For commercial rental real estate and buildings used in a trade or business, the depreciable life is 39 years. For residential rental property, the depreciable life is 27.5 years. You can also depreciate real property if you use it in a trade or business or if it creates income for you. Seven-year property – appliances, office furniture, and property that hasn’t been categorized.Five-year property – office equipment, computers, vehicles, and construction assets.
Three-year property – certain livestock, manufacturing tools, and over-the-road tractor units.Usually, you can break down business assets into categories based on the set amount of years in which you can depreciate the assets. To do this, you’ll need to determine the depreciation schedule for the asset.įirst, you’ll need to choose the category of the property. This includes business assets like equipment and property.
If you own a business, you can deduct purchases used to make income for your business over time.