Over how many years can commercial property be depreciated?

Commercial property can be depreciated over a period of 39 years according to the Modified Accelerated Cost Recovery System (MACRS) used in the United States. This long depreciation schedule reflects the typical useful life of commercial real estate, which is considered to have a stable income-producing capability over this extended period.

In terms of tax treatment, this allows property owners to recover the cost of their investment over nearly four decades, thus providing significant tax benefits through the deduction of depreciation from income. This is particularly important for investors and businesses that rely on commercial properties, as it helps offset taxable income, enhancing overall cash flow.

Assets like residential rental properties have shorter depreciation periods of 27.5 years, while certain improvements or specific types of properties can sometimes qualify for shorter windows of 15 years, but these do not apply to standard commercial properties, which are firmly set at 39 years. Understanding these classifications is crucial for real estate professionals when advising clients on tax implications and investment strategies.