MACRS Depreciation Tables: 5-Year, 15-Year, 27.5-Year & 39-Year Rev. Proc. 87-57 Reference Guide
The complete engineering and CPA reference to IRS Publication 946 Appendix A and Rev. Proc. 87-57 MACRS percentage schedules for cost segregation studies.
Matthew Gigantelli
Lead Cost Seg Engineer · ASCSP M009-25
How MACRS Accelerated Depreciation Schedules Work in Cost Segregation
Under the Modified Accelerated Cost Recovery System (MACRS, IRC Section 168), residential rental buildings depreciate over 27.5 years (3.636% per full year) and commercial buildings depreciate over 39 years (2.564% per full year) using straight-line mid-month tables. An engineering cost segregation study reclassifies 18% to 35%+ of that building basis into 5-year property (200% declining balance: 20.00% Year 1, 32.00% Year 2) and 15-year property (150% declining balance: 5.00% Year 1, 9.50% Year 2), which also qualify for 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025 (compared with 40% for property acquired before January 20, 2025, under Public Law 119-21 Section 70301).
1. Complete 5-Year & 15-Year MACRS Percentage Tables (Rev. Proc. 87-57, Table A-1 Half-Year Convention)
When a cost segregation study reclassifies interior fixtures, carpeting, cabinetry, dedicated equipment wiring, and specialty plumbing into 5-year MACRS property (Asset Class 57.0), or reclassifies site paving, curbing, fencing, site lighting, and landscaping into 15-year MACRS property (Asset Class 00.3), those assets follow IRS Publication 946 Table A-1 under the General Depreciation System (GDS) half-year convention whenever the taxpayer elects out of bonus depreciation or applies standard MACRS to the post-bonus remaining basis:
| Recovery Year | 5-Year Property (200% DB, Half-Year) | 7-Year Property (200% DB, Half-Year) | 15-Year Property (150% DB, Half-Year) | 15-Year QIP (Straight-Line, Half-Year) |
|---|---|---|---|---|
| Year 1 | 20.00% | 14.29% | 5.00% | 3.33% |
| Year 2 | 32.00% | 24.49% | 9.50% | 6.67% |
| Year 3 | 19.20% | 17.49% | 8.55% | 6.67% |
| Year 4 | 11.52% | 12.49% | 7.70% | 6.67% |
| Year 5 | 11.52% | 8.93% | 6.93% | 6.67% |
| Year 6 | 5.76% | 8.92% | 6.23% | 6.67% |
| Year 7 | - | 8.93% | 5.90% | 6.67% |
| Year 8 | - | 4.46% | 5.90% | 6.66% |
| Years 9-15 (each) | - | - | 5.91% / 5.90% | 6.67% / 6.66% |
| Year 16 | - | - | 2.95% | 3.33% |
| Cumulative Total | 100.00% | 100.00% | 100.00% | 100.00% |
Note: In Years 9, 11, 13, and 15 of the 15-year 150% DB table (IRS Table A-1), the rounding percentage alternates between 5.91% and 5.90% so total recovery equals exactly 100.00%. See our Qualified Improvement Property (QIP) 15-year guide for why QIP uses straight-line over 15 years under IRC Section 168(b)(3)(G) while Asset Class 00.3 land improvements use 150% declining balance under IRC Section 168(b)(2)(A).
Quick MACRS Year-1 Deduction Comparison
Compare straight-line MACRS against cost segregation across two quick inputs.
2. 27.5-Year Residential & 39-Year Commercial Straight-Line Mid-Month Tables (Tables A-6 & A-7a)
Unlike 5-year and 15-year components (which use the half-year convention regardless of whether you close in January or September, unless the fourth-quarter 40% mid-quarter test triggers), structural building shells under IRC Section 168(d)(2) use the mid-month convention. Your Year-1 percentage depends on the exact calendar month the building is placed in service:
| Month Placed in Service | 27.5-Yr Residential Year 1 (Table A-6) | 27.5-Yr Years 2-27 Annual Rate | 39-Yr Commercial Year 1 (Table A-7a) | 39-Yr Years 2-39 Annual Rate |
|---|---|---|---|---|
| 1 (January) | 3.485% | 3.636% | 2.461% | 2.564% |
| 2 (February) | 3.182% | 3.636% | 2.247% | 2.564% |
| 3 (March) | 2.879% | 3.636% | 2.033% | 2.564% |
| 4 (April) | 2.576% | 3.636% | 1.819% | 2.564% |
| 5 (May) | 2.273% | 3.636% | 1.605% | 2.564% |
| 6 (June) | 1.970% | 3.636% | 1.391% | 2.564% |
| 7 (July) | 1.667% | 3.636% | 1.177% | 2.564% |
| 8 (August) | 1.364% | 3.636% | 0.963% | 2.564% |
| 9 (September) | 1.061% | 3.636% | 0.749% | 2.564% |
| 10 (October) | 0.758% | 3.636% | 0.535% | 2.564% |
| 11 (November) | 0.455% | 3.636% | 0.321% | 2.564% |
| 12 (December) | 0.152% | 3.636% | 0.107% | 2.564% |
The December Closing Advantage: Why Year-End Acquisitions Win Big
Look closely at Row 12 (December) in the mid-month table above. If you close on a $2,000,000 commercial building ($1,600,000 depreciable building basis) on December 15 and do not perform a cost segregation study, your Year-1 straight-line MACRS deduction is just 0.107% of $1,600,000, which equals $1,712.
With an engineering cost segregation study reclassifying 28% ($448,000) into 5-year and 15-year property, that $448,000 is not subject to the 0.107% December mid-month proration. Under IRC Section 168(k) as amended by Public Law 119-21 Section 70301, qualified property with a recovery period of 20 years or less enjoys 100% bonus depreciation for property acquired and placed in service after January 19, 2025 (compared with 40% for property acquired before January 20, 2025), generating a full $448,000 Year-1 deduction even when placed in service on December 30. See our Cost Segregation Timing Strategy guide for fourth-quarter mid-quarter convention planning.
3. Worked Comparison: Standard MACRS Without Bonus vs. 40% Bonus vs. 100% Bonus
Even when an investor elects out of bonus depreciation (or holds property in a state that decouples from federal IRC Section 168(k) bonus depreciation, as detailed in our State Bonus Depreciation Conformity guide), the 5-year 200% declining balance and 15-year 150% declining balance MACRS tables still front-load massive deductions in Years 1 through 5 compared to 27.5-year or 39-year straight-line recovery.
Consider a $1,250,000 multifamily property placed in service in June ($1,000,000 depreciable building basis) where an engineering cost segregation study allocates 20% ($200,000) to 5-year property, 8% ($80,000) to 15-year land improvements, and 72% ($720,000) to 27.5-year residential building:
| Depreciation Scenario ($1,000,000 Depreciable Basis, June Closing) | Year 1 Deduction | Year 2 Deduction | Cumulative 5-Year Deductions |
|---|---|---|---|
| No Cost Segregation (100% in 27.5-Yr SL, June mid-month) | $19,700 | $36,360 | $165,140 |
| Cost Seg + Standard MACRS Without Bonus Depreciation (Table A-1) | $58,184 | $97,779 | $337,525 |
| Cost Seg + 40% Bonus (Pre-Jan 20, 2025 Acquisition Binding Contract Branch) | $152,984 | $69,139 | $362,075 |
| Cost Seg + 100% Bonus (Post-Jan 19, 2025 Acquisition under PL 119-21) | $294,184 | $26,179 | $398,901 |
Notice that even under standard MACRS without bonus depreciation, reclassifying $280,000 into 5-year and 15-year schedules ($188,480.00 from 5-year property at 94.24% over 5 years, $30,144.00 from 15-year property at 37.68% over 5 years, and $118,900.80 from 27.5-year June mid-month straight-line at 16.514% over 5 years, totaling $337,524.80) more than doubles cumulative 5-year depreciation ($337,525 vs $165,140), while the 40% bonus branch reaches $362,075 ($362,075.20 exact) and the 100% bonus depreciation branch (for property acquired and placed in service after January 19, 2025) accelerates $294,184 into Year 1 alone ($398,900.80 over 5 years).
4. Rev. Proc. 87-56 Asset Classes Every Real Estate Investor Should Know
- Asset Class 57.0 (Distributive Trades and Services - 5-Year GDS / 9-Year ADS): Applies to tangible personal property used in rental real estate, retail, hospitality, medical, and office properties, including removable floor coverings, decorative millwork, dedicated equipment electrical, window treatments, and appliances.
- Asset Class 00.11 (Office Furniture, Fixtures, and Equipment - 7-Year GDS / 10-Year ADS): Desks, safes, files, and non-structural office furnishings when not classified under specific industry classes.
- Asset Class 00.3 (Land Improvements - 15-Year GDS 150% DB / 20-Year ADS): Sidewalks, concrete pads, asphalt parking lots, site drainage, retention ponds, landscaping, shrubbery, perimeter fencing, and exterior signage placed directly on land.
- IRC Section 168(e)(6) Qualified Improvement Property (15-Year GDS Straight-Line / 20-Year ADS): Interior non-structural improvements to nonresidential buildings placed in service after the building was first placed in service. Because its 15-year recovery period is 20 years or less, QIP qualifies for bonus depreciation under IRC Section 168(k).