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
Single-family dwelling attached to other units by common walls. ...
A mortgage loan where the bank provides the mortgagor the required funds to purchase property the bank has obtained through foreclosure on outstanding mortgages. For example, John obtains a ...
Geographic location where a vacant or occupied structure exists. It usually means the land reserved is for a future building. ...
What is a turnkey property? A turnkey property is a very popular type of investment property that real estate investors prefer because it starts bringing a return on investment quickly. ...
In real estate, asking price is referred to as the amount set by the seller, the amount he/she wants to receive for the purchase of their home by the buyer. The asking price isn’t ...
The accelerated cost recovery system is a depreciation system for tax purposes mandated by the Economic Recovery Tax Act of 1981. In 1986 the Accelerated Cost Recovery System (ACRS) was ...
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. ...
Net operating income (NOI) of property relative to its market value. If rental income property worth $1,000,000 results in NOI of $100,000, the overall return is 10%. NOI compared to ...
If you're involved in real estate, whether buying, selling, or investing, you might have come across the term "alluvium." It's not just a fancy word but an important concept. Let's delve ...
Have a question or comment?
We're here to help.