What is MACRS Depreciation

The Modified Accelerated Cost Recovery System, or MACRS, is the most common method used to determine depreciation deductions. MACRS has special calculation rules used to determine your deduction for the first year that property is placed into service.

MACRS Depreciation Methods

There are three methods to determine MACRS depreciation. The MACRS depreciation method you use depends on the type of property and when it was placed in service. For property used in rental activities you use one of the following:

The focus of this site is on MACRS depreciation because it is the depreciation method most people will use. To learn more about ACRS, read IRS publication 534.

MACRS Depreciation Calculation Rules – Conventions

There are special depreciation calculation rules for the first and last years in which the property is placed in service. You are required to use a specific “convention”, based on the type of property you are depreciating. The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. The convention types include:

Under MACRS, averaging conventions establish when the recovery period begins and ends. The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property.

To learn more about MACRS, the Modified Accelerated Cost Recovery System, visit the Wikipedia overview

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