Three-Year Property: Generally, this includes property with an Asset Depreciation Range (ADR) class life of four years or less. Examples are tractor units for over-the-road use, racehorses over two years old (all racehorses regardless of age 2009 through 2021) when placed in service, other horses over twelve years old when placed in service.

Five-Year Property: Includes property with an ADR class life of more than four but less than ten years. Examples are computers, typewriters, copiers, duplicating equipment, heavy trucks, trailers, cargo containers, autos, motorcycles, light-duty trucks, certain technological and research equipment. Also, appliances, carpets, furniture, etc., if used in a rental real estate activity. After December 31, 2024 will include certain green energy property; qualified facilities (Sec 45Y(b)(1)(A)), qualified property (Sec 48E(b)(2)), and energy storage technology (Sec 48(c)(6)) as added by the Inflation Reduction Act of 2022.

Seven-Year Property: Includes property with an ADR class life of ten years or more, but less than sixteen years. This category is also the “catch-all” for assets with no ADR assignment. Examples are office furnishings, fixtures and equipment, railroad track and theme park structures.

Ten-Year Property: Includes property with an ADR class life of sixteen or more years, but less than twenty years. An example is water transportation equipment.

Fifteen-Year Property: Includes property with an ADR class life of twenty or more, but less than twenty-five years. Examples are municipal sewage treatment plants, telephone distribution plants, two-way communication equipment, parking lots, sidewalks, roads, landscaping and fences. Qualified improvement property was added retroactively by the CARES Act.  Also includes service station building and petroleum marketing land improvements (asset class 57.1) used in the marketing of petroleum and petroleum products.

Twenty-Year Property: Includes property with an ADR class life of twenty-five years or more, other than 1250 real property (residential and non-residential). Examples are municipal sewers and farm buildings.

Twenty-Seven-And-One-Half-Year Property: Includes real property (Section 1250) that is residential rental property and mobile homes. To qualify as residential, the property must derive 80% or more of its rental income from its dwelling units. A hotel or motel with more than half of the units used on a transitory basis IS NOT a part of this class, notwithstanding percent of income derived from rental. Buildings used to provide housing to seniors in communities that offer a range of services (e.g., from independent to assisted living to nursing care) as well as housing are properly classified as residential rental property for depreciation purposes according to an IRS Internal Legal Memorandum (ILM 201147025). Thus, the buildings may be depreciated over a 27.5-year recovery period, rather than the 39-year period that applies to non-residential rental property.

Thirty-One-And-One-Half-Year Property: Includes any real property which is not residential rental property, and which was acquired before 05/13/93.

Thirty-Nine-Year Property: For non-residential real property placed in service after 05/12/93, the depreciation period is 39 years. The old rules continue to apply to property placed in service before 01/01/94, if the taxpayer had a binding contract before 05/13/93, or construction of a property by or for the taxpayer or a “qualified person” began before 05/13/93. A “qualified person” is anyone who transfers his/her rights in a contract or the property itself to the taxpayer before the property is placed in service.