How many years do you depreciate new cabinets for tax purposes?
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For U.S. federal income tax purposes, the depreciable life of new cabinets depends on how they are classified under the Internal Revenue Code and the Modified Accelerated Cost Recovery System (MACRS).
1. Classification of Cabinets
- Office Cabinets: Typically, cabinets installed in an office environment are considered "office furniture and fixtures." Under MACRS, these are classified as 7-year property.
- Retail or Store Cabinets: Cabinets used as store fixtures are also generally classified as 7-year property.
- Residential Rental Property: If cabinets are installed as part of a residential rental property (such as kitchen or bathroom cabinets in an apartment), they are considered part of the building’s structural components and are depreciated over 27.5 years (the recovery period for residential rental property).
- Nonresidential Real Property: If cabinets are installed as part of a nonresidential building (such as an office building), and are considered structural components, they are depreciated over 39 years (the recovery period for nonresidential real property).
2. Most Common Scenario:
For most businesses, new cabinets that are not structural components of a building (i.e., they are movable or not permanently affixed) are classified as office furniture and fixtures and are depreciated over a 7-year recovery period using MACRS.
3. Supporting Authority
- MACRS Table B-1 lists "Office Furniture, Fixtures, and Equipment" (which includes cabinets) as 7-year property.
- IRS Publication 946 confirms that office furniture and fixtures are depreciated over 7 years.
- Cost Segregation Audit Technique Guide and industry matrices also classify cabinets as 7-year property when used as office furniture or fixtures.
4. Summary Table
Key Considerations: If the cabinets are permanently affixed and considered part of the building’s structure, use the building’s recovery period (27.5 or 39 years).- If the cabinets are movable or not integral to the building, use the 7-year period for office furniture and fixtures.- The method of depreciation is typically the 200% declining balance method switching to straight line, unless you elect otherwise.
5. Conclusion
For most business purposes, new cabinets are depreciated over 7 years under MACRS. However, if they are part of the building’s structure, use the longer building recovery period.
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