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Small Business Deductions: Depreciation

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Recovery Periods
Recovery Period Class Life Examples of Property
3-year property 4-years or less Special tools and devices for the manufacture of food, beverages, rubber products, finished plastics, fabricated metal products; race horses more than two years old when placed in service and other horses more than 12 years old when placed in service
5-year property 4+yrs less than 10 Cars and light-duty trucks (unloaded weight less than 13,000 pounds), taxis, buses, computers, computer-related peripheral equipment, typewriters, copiers, duplicating equipment, heavy general purpose trucks, trailers, cargo containers, trailer-mounted containers
7-year property 10+yrs less than16 Office furniture and fixtures (desks, safes, files); cellular phones; fax machines; refrigerators; musical instruments, toys and sporting goods NOTE: This class life is also used as a catch-all for assets not assigned a class life by law.
10-year property 16+yrs less than 20 Vessels, barges, tugs and water transportation equipment; assets used in petroleum refining or the manufacture of tobacco products
15-year property 20+yrs less than 25 Land improvements such as fences, sidewalks, docks, shrubbery, roads and bridges
20-year property 25+yrs Farm buildings and municipal sewers (residential and nonresidential real estate is excluded)
27.5-year property ------- Residential rental property (must use straight-line depreciation)
39-year property ------- Nonresidential real property (must use straight-line depreciation)

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Depreciation: Important Points to Keep in Mind When Depreciating Property

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