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Information regarding the applicable depreciation methods for each classification of property is listed below. Refer to IRS Instructions for Form 4562 Depreciation and Amortization (Including Information on Listed Property) and IRS Publication 946 How To Depreciate Property for additional information.

  • 3-, 5-, 7-, and 10-year property - the applicable method is generally the 200% Declining Balance method.
  • 15- and 20-year property and property used in a farming business - the applicable method is the 150% Declining Balance method.
  • Residential rental property or nonresidential real property - the only applicable method is the Straight Line method.

On Form 4562 Depreciation and Amortization, enter the following text for each method of depreciation:

  • "200 DB" - 200% Declining Balance
  • "150 DB" - 150% Declining Balance
  • "S/L" - Straight Line.

For 3-, 5-, 7-, or 10-year property eligible for the 200% Declining Balance method, you may make an irrevocable election to use the 150% Declining Balance method. The election applies to all property within the classification that was placed in service during the tax year.

You may make an irrevocable election to use the Straight Line method, instead of the Declining Balance method, for all property within a classification that is placed in service during the tax year.

For 200% Declining Balance and 150% Declining Balance property, the depreciation will switch to the Straight Line method in the first tax year the Straight Line rate exceeds the Declining Balance rate.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.

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