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
Financial institution that services savings and checking accounts, provides loans, and deals with negotiable instruments. Stringent federal and local regulations exist over banking ...
Housing where affirmative action is actively pursued encouraging people of all races, nationalities, and religions to purchase or rent the facilities. ...
To clip or prune shrubbery,etc. ...
Charge assessed a mortgagor by the mortgagee when assuming a pre-existing mortgage. The assumption fee is often included in the closing costs when purchasing property. ...
A person who dies without a will and having unknown intentions regarding his estate. In such case, a court administrator is typically appointed to act as an executor in distributing any ...
Maximum credit a prospective buyer may be given. An example is the maximum mortgage a prospective home buyer may receive from the bank. ...
Created by law usually for the right to travel to landlocked parcel of land ...
Receipt given for a partial payment made on the sale of property. It shows the buyer has made a down payment. ...
Where something of value is kept in a secured place. An example is important real estate document and/or money kept in a bank vault. Ceiling or roof designed as an arch. ...
Have a question or comment?
We're here to help.