Furniture Depreciation



Furniture depreciation, like many other tax deductions is closely regulated by the IRS to insure compliance with the tax laws. Congress issued the Class Life Asset Depreciation Range (ADR) system in 1971. Under that current system, furniture purchased for use in business may be depreciated one of two ways: either by the IRS section 179 rules, or according to the Modified Accelerated Cost Recovery System (MACRS). Using the 179 rules allows the tax payer to take the deduction all in the first year of service. However, tax rules generally favor the individual who depreciates the cost of an item over time by giving a more favorable total deduction. For furniture, the MACR seven year depreciation schedule is used and is available to individuals as a chart to help. The depreciation percentage is not the same for every year, and the table is subject to change at the whim of Congress, so the table should be checked every year.



Under the IRS system of depreciation, taxpayers must used a class and a method to depreciate property. Property is divided into asset classes by the type of asset and business for which it is used. Each class has three lives: regular depreciation (GDS), alternate depreciation (ADS), and a class life. Taxpayers may use any of the three lives, provided they are not required to use the alternate depreciation life. Only the straight line or declining balance methods may be used for depreciation. Some assets can be depreciated according to the alternative depreciation system (ADS), when the assets are located outside of the US.

Taxpayers may look at the MACRS property classes table from IRS publication 946 to see what class the property they want to depreciate falls in, and get the class life for either regular or alternate depreciation.

Looking at the MACRS GDS property classes table, one can see that property falls into 3, 5, 7, 10, 15, and 20 year classes. Office furniture falls under the seven year class. Computers are not considered furniture and fall under the five year class. Real estate has a 27.5 year class for residential, and a 39 year class for non-residential.

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