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
Current cost to replace property with an identical property after allowing for the depreciated value of the property. ...
(1) Licensed broker employed to represent and match both buyers and sellers. Usually employs several real estate agents in an office. (2) Commission or fee charged to sell real estate or ...
The appraisal approach is used to estimate the value of an asset, based on various factors to reach the closest educated guess of the asset. While an appraisal approach does consider the ...
Significant information that if disclosed would affect an individual's decision. For example, a buyer would probably not enter into a contract with a seller of real property if it was known ...
The definition of a closed-end lease is what happens when an individual rents or leases an asset at a monthly rate with no obligations for the lessee to purchase the asset that he rents at ...
Meaning or definition given to an act, fact. Or thing through legal or juridical interpretation. ...
The definition of an open-end lease is what happens when someone rents a property for a monthly rate with the added obligation to make a large final payment when the agreement is over to ...
What is the meaning of a story, and what is it good for? The story definition is a floor, level, or deck in a construction or building. What does story mean in real estate? A real ...
Mortgage on both the purchased real estate and personal property of a durable type. The entire amount financed is considered one mortgage. In residential real estate, a builder might ...
Have a question or comment?
We're here to help.