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
(1) Government seizes private property, but does not provide fair and reasonable compensation for it. (2) Property is seized and the owners rights abolished because of a legal violation. ...
Second home. The interest and real estate taxes on the second home are tax deductible on the family's 1040 tax return. ...
Additional utility an individual receives when purchasing an additional unit of a commodity or service. Represents a trade off between units of cost and unit of utility. For example, an ...
To clip or prune shrubbery,etc. ...
An individual for whom a court has awarded a financial judgment against a debtor. For example, a court award makes Smith a judgment creditor against Cole for $2,000. ...
A rental stipulation a varying rental rate. Rental rate are determined tied to periodic appraisals or an inflation or an inflation index. The provision is more common in a long-term leases. ...
Lawsuit brought by one or more persons of a large group for the benefit of all members of the group. ...
Something offering protection against the wind such as trees and fences. ...
The selling of a parcel of land whereby the original owner agrees to immediately leaseback the property. The advantage of the land sale-leaseback in that the original property owner can ...
Have a question or comment?
We're here to help.