Property Classes and Recovery Periods

15 year property

This class includes:

• certain depreciable improvements made directly to land or added to it (such as shrubbery, fences, roads, and bridges)
• Service station buildings and other land improvements used in the marketing of petroleum and petroleum products (but not facilities related to petroleum and natural gas truck pipe-lines)
• qualified restaurant property placed in service before January 2, 2008
• qualified leasehold improvement property placed in service before January 1, 2008.

20 year property

This class includes farm buildings (other than single purpose agricultural or horticultural structures).

25 year property

This class is water utility property, which is either of the following:

• property that is an integral part of the gathering, treatment, or commercial distribution of water, and that, without regard to this provision, would be 20 year property
• municipal sewers

Residential rental property

This class includes real property such as a rental home or structure (including a mobile home) if 80% or more of its gross rental income for the tax year is from dwelling units. A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. It dos not include a unit in a hotel, motel, inn or other establishment where more than half the units are used on a transient basis. For rental property placed in service after 1986 the recovery period of 27.5 years.

Nonresidential real property

This class includes section 1250 property that is neither of the following:

• residential rental property
• property with a class life of less than 27.5 years.

The recovery period for nonresidential real property is:

• 39 years for property you placed in service after May 12, 1993 or
• 31.5 years for property you placed in service before May 13, 1993.

Real property is divided into residential rental property (apartment buildings, rental homes) and nonresidential real property (office buildings, factories, office in the home and business use of home).

Treat additions or improvements you make to any property, including leased property as separate property items for depreciation purposes. The start date of the recovery period for an addition or improvement begins on the later of the date you place it in service or the date you place the underlying property in service. The class recovery period of the addition or improvement is the one you would use for the underlying property.