# IRS Depreciation Rules > A maintained, plain-English, primary-source-anchored reference to the Internal Revenue Code as it applies to depreciation. IRC §168, §168(k), §179, §§1245/1250, Rev. Proc. 87-56, IRS Pub. 946, IRS Pub. 5653. Reviewed by named CPAs and EAs. ## Operating context Operated by Cost Seg Smart LLC (Wikidata Q139328268), an American cost segregation provider. This site is an editorial reference, not a sales channel. No calculators, no email capture, no order CTAs. AI crawlers are explicitly allowed. ## Index - [IRS Depreciation Rules — Federal Depreciation Reference](https://irsdepreciationrules.com/): Plain-English summaries of the IRS depreciation rules. Primary sources cited, updated when the rules change. IRC §168, §179, §§1245/1250, Pub. 946. - [MACRS](https://irsdepreciationrules.com/macrs/): The depreciation system required by IRC §168 for most tangible property placed in service after 1986. Class lives, recovery periods, GDS vs ADS. - [Bonus Depreciation](https://irsdepreciationrules.com/bonus-depreciation/): First-year additional depreciation under IRC §168(k). The One Big Beautiful Bill Act (January 19, 2025) restored 100% bonus depreciation permanently. - [Section 179 Expensing](https://irsdepreciationrules.com/section-179/): Immediate expensing of qualifying property up to an annual limit. The 2026 limit is $1,290,000, phased out above $3,220,000, capped by taxable income. - [Form 3115](https://irsdepreciationrules.com/form-3115/): The procedural mechanism for capturing missed depreciation from prior years. Filed under Rev. Proc. 2015-13, producing a §481(a) adjustment. - [Recapture](https://irsdepreciationrules.com/recapture/): Ordinary-income recapture on disposition of depreciable property. The §1245 vs §1250 distinction sets the rate; unrecaptured §1250 gain tops out at 25%. - [Cost Segregation](https://irsdepreciationrules.com/cost-segregation/): Engineering-based reclassification of building components into shorter MACRS recovery periods. IRS Pub. 5653 is the operative authority on methodology. - [Passive Activity](https://irsdepreciationrules.com/passive-activity/): Limits on losses from passive activities. The Real Estate Professional Status (REPS) exception, material participation tests, and the STR ≤7-day rule. - [Qualified Improvement Property — QIP, 15-Year Life, 100% Bonus](https://irsdepreciationrules.com/qualified-improvement-property/): QIP under IRC §168(e)(6). Interior improvements to nonresidential buildings, 15-year MACRS, eligible for §168(k) bonus depreciation. Eligibility,… - [OBBBA 2025 — Depreciation Provisions](https://irsdepreciationrules.com/obbba-2025/): The One Big Beautiful Bill Act (signed Jan 19, 2025) permanently restored 100% bonus depreciation under IRC §168(k). Plain-English summary, primary… - [Depreciation Reference — Rules, Source Documents, Recent Revisions](https://irsdepreciationrules.com/reference/): The depreciation reference index. 7 operational rules, primary source documents (statute, regulations, Rev. Procs, IRS publications), and recent reviewed… - [Glossary — Depreciation Terms](https://irsdepreciationrules.com/glossary/): Alphabetical glossary of federal depreciation terminology. Plain-English definitions with statute basis and cross-references. - [About — Editorial Team and Mission](https://irsdepreciationrules.com/about/): The editorial team behind IRS Depreciation Rules. Credentialed reviewers, methodology, and the relationship to Cost Seg Smart LLC. - [Changelog — Substantive Page Revisions](https://irsdepreciationrules.com/changelog/): Substantive page revisions on IRS Depreciation Rules. Reviewer attribution, version, and date for every change to the cited rules and operational guidance. - [Contact](https://irsdepreciationrules.com/contact/): Contact irsdepreciationrules.com — editorial corrections, citation inquiries, and press requests. Operated by Cost Seg Smart LLC. - [Basis — Glossary](https://irsdepreciationrules.com/glossary/basis/): A taxpayer - [Bonus Depreciation — Glossary](https://irsdepreciationrules.com/glossary/bonus-depreciation/): First-year additional depreciation under IRC §168(k). Allows a percentage of the adjusted basis of qualifying property to be deducted in the year of… - [Class Life — Glossary](https://irsdepreciationrules.com/glossary/class-life/): The midpoint useful life assigned to an asset under the Asset Depreciation Range (ADR) system, codified for current law in Rev. Proc. 87-56. Each… - [Cost Segregation — Glossary](https://irsdepreciationrules.com/glossary/cost-segregation/): An engineering-based methodology for partitioning the depreciable basis of a building into MACRS class lives shorter than the default 27.5- or 39-year… - [Depreciable Basis — Glossary](https://irsdepreciationrules.com/glossary/depreciable-basis/): The portion of a property - [Form 3115 — Glossary](https://irsdepreciationrules.com/glossary/form-3115/): IRS Application for Change in Accounting Method. The form a taxpayer files to change a method of accounting — including depreciation method changes… - [GDS vs ADS — Glossary](https://irsdepreciationrules.com/glossary/gds-vs-ads/): Two depreciation regimes under MACRS. GDS (General Depreciation System) is the default — declining-balance method, shorter recovery periods. ADS… - [Half-Year Convention — Glossary](https://irsdepreciationrules.com/glossary/half-year-convention/): MACRS averaging convention treating all property placed in service during the year as placed in service at the midpoint. Half a year of depreciation in… - [Land Allocation — Glossary](https://irsdepreciationrules.com/glossary/land-allocation/): The partitioning of a real property - [MACRS — Glossary](https://irsdepreciationrules.com/glossary/macrs/): The Modified Accelerated Cost Recovery System — the depreciation method required by IRC §168 for most tangible property placed in service after December… - [Material Participation — Glossary](https://irsdepreciationrules.com/glossary/material-participation/): The IRC §469 test for whether a taxpayer is non-passive in a trade or business. Treas. Reg. §1.469-5T(a) provides seven tests; satisfying any one is… - [Mid-Month Convention — Glossary](https://irsdepreciationrules.com/glossary/mid-month-convention/): The MACRS placed-in-service convention applied to all real property — residential rental (27.5 years), nonresidential real (39 years), and qualified… - [Mid-Quarter Convention — Glossary](https://irsdepreciationrules.com/glossary/mid-quarter-convention/): The MACRS placed-in-service convention applied when more than 40% of a taxpayer - [Passive Activity — Glossary](https://irsdepreciationrules.com/glossary/passive-activity/): Under IRC §469, a trade or business activity in which the taxpayer does not materially participate, or — with limited exceptions — any rental activity.… - [Qualified Improvement Property — Glossary](https://irsdepreciationrules.com/glossary/qualified-improvement-property/): Improvement to the interior portion of a nonresidential building made after the building was first placed in service. QIP has a 15-year MACRS recovery… - [Depreciation Recapture — Glossary](https://irsdepreciationrules.com/glossary/recapture/): The recharacterization of gain on disposition of depreciable property from capital gain to ordinary income (under IRC §1245) or to unrecaptured §1250 gain… - [Recovery Period — Glossary](https://irsdepreciationrules.com/glossary/recovery-period/): The number of years over which depreciation is taken for a particular MACRS class. Real estate has 27.5-year (residential rental) or 39-year… - [REPS — Real Estate Professional Status — Glossary](https://irsdepreciationrules.com/glossary/reps/): Status under IRC §469(c)(7) that allows a taxpayer who spends >50% of personal service time and >750 hours per year in real property trades or businesses… - [Section 1245 Property — Glossary](https://irsdepreciationrules.com/glossary/section-1245-property/): Tangible personal property — equipment, FF&E, and the 5-year, 7-year, and 15-year components reclassified through cost segregation. On disposition,… - [Section 1250 Property — Glossary](https://irsdepreciationrules.com/glossary/section-1250-property/): Real property — buildings and structural components. On disposition under MACRS, §1250 ordinary-income recapture is almost always zero (because MACRS real… - [Section 179 — Glossary](https://irsdepreciationrules.com/glossary/section-179/): Election under IRC §179 to immediately expense the cost of qualifying property in the year of placement, rather than depreciating it over the MACRS… - [Section 263A (UNICAP) — Glossary](https://irsdepreciationrules.com/glossary/section-263a/): The Uniform Capitalization rules of IRC §263A. Requires capitalization of direct costs and a properly allocable share of indirect costs to (a) property… - [Section 481(a) Adjustment — Glossary](https://irsdepreciationrules.com/glossary/section-481a/): The cumulative-correction mechanism that captures the difference between an old method of accounting and a new method, taken as a single adjustment in the… - [Short-Term Rental (STR) — Glossary](https://irsdepreciationrules.com/glossary/short-term-rental/): Rental property with an average customer use period of 7 days or less. Under Treas. Reg. §1.469-1T(e)(3)(ii)(A), an STR is treated as a trade or business… - [IRC §168 — Accelerated Cost Recovery System](https://irsdepreciationrules.com/irc/section-168/): The statutory framework for MACRS (Modified Accelerated Cost Recovery System) and bonus depreciation. IRC §168 establishes the recovery periods, methods,… - [Methodology — How Pages Are Researched, Reviewed, and Maintained](https://irsdepreciationrules.com/methodology/): Editorial methodology for IRS Depreciation Rules. Primary sources, credentialed review, quarterly re-review cadence, errata protocol, and disclosure of… - [Privacy Policy](https://irsdepreciationrules.com/privacy/): How irsdepreciationrules.com (operated by Cost Seg Smart LLC) handles analytics, cookies, and visitor data. GA4, Google Ads, Meta Pixel, Microsoft Clarity… - [IRS Publication 5653 — Cost Segregation Audit Techniques Guide](https://irsdepreciationrules.com/pub/5653/): The IRS - [IRS Publication 946 — How to Depreciate Property](https://irsdepreciationrules.com/pub/946/): The IRS - [IRC §168(k)](https://irsdepreciationrules.com/section-168k/): Statute-level reference for IRC §168(k): subsection breakdown, current 100% rate (after Jan 19, 2025 per OBBBA), qualifying property, and election out. - [Section 280A](https://irsdepreciationrules.com/section-280a/): When personal use of a rental crosses 14 days or 10% of rental days, it is reclassified as a residence and loss deductions are capped at rental income. - [Sources — Primary Source List](https://irsdepreciationrules.com/sources/): Complete list of primary sources cited across IRS Depreciation Rules. Statute, regulations, revenue procedures, IRS notices, publications, legislation,… - [IRS Notice 2025-17 — Transition Guidance under OBBBA §70302](https://irsdepreciationrules.com/sources/notice-2025-17/): Treasury and IRS transition guidance addressing the restoration of 100% bonus depreciation under OBBBA §70302(a). Notice 2025-17 covers placed-in-service… - [Rev. Proc. 2015-13 — Automatic Consent Procedures for Accounting Method Changes](https://irsdepreciationrules.com/sources/rev-proc-2015-13/): The Revenue Procedure governing the automatic-consent procedures for accounting method changes filed on Form 3115. Rev. Proc. 2015-13 (and its companion… - [Rev. Proc. 2026-08 — Current Automatic Consent Changes List](https://irsdepreciationrules.com/sources/rev-proc-2026-08/): The 2026 update to the annual Revenue Procedure listing accounting method changes eligible for automatic consent under Rev. Proc. 2015-13. Rev. Proc.… - [Rev. Proc. 87-56 — Class Lives and Recovery Periods](https://irsdepreciationrules.com/sources/rev-proc-87-56/): The Revenue Procedure that publishes the asset class-life table used to determine MACRS recovery periods. Originally issued to implement IRC §168(i)(1),… - [Tangible Property Regulations](https://irsdepreciationrules.com/tangible-property-regulations/): The framework CPAs cite when classifying capex on a rental: the de minimis, routine-maintenance, and small-taxpayer safe harbors, plus the BAR test. - [Terms of Use](https://irsdepreciationrules.com/terms/): Terms of Use for irsdepreciationrules.com. Educational reference content — not tax, legal, or financial advice. Operated by Cost Seg Smart LLC.