Modified Accelerated Cost Recovery System (MACRS)
Definition of "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
Assemblage in real estate is the process of combining multiple small plots of land into one larger plot. This is accompanied by plottage, which is the increase in value that occurs when ...
City apartment building that is overcrowded, poorly constructed or maintained, and generally part of a slum. In law, a tenement also refers to possessions of an individual that are ...
The coefficient of dispersion is how municipalities can determine differences between the assessed values of properties in an area or neighborhood. It gives a broader look at the state of ...
Building's total floor area, in square feet, designed for tenant leasing. The GLA in normally calculated from the outside walls to any existing room partitions. ...
Primary residence of an individual. The principal residence can be a single family home, condominium, cooperative, or trailer. A principal residence may qualify for a homestead exemption in ...
Issued to correct errors in another deed such as spelling errors in a name or an improper legal description. For example, a correction deed was issued to the property owner Smith to amend ...
A large enclosed shopping mall having several national and regional retails stores acting as anchor tenants. The enclosed floor area of regional shopping centers ranges between 250,000 ...
The substitution of one person or business for another when the substituted person or business has the same rights and obligations as the original party. An insurance company can surogate ...
The down payment on the price of a real estate. For example, it is customary to make a down payment of 10% of the value of a real estate parcel upon signing the purchase agreement. ...
Have a question or comment?
We're here to help.