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Home > Tax Expenditure Budget > Summary > Corporate and Ohter Business Excise > Accelerated Deductions from Gross Income > 2.301 - Modified Accelerated Cost Recovery System on Rental Housing

2.301 -Modified Accelerated Cost Recovery System on Rental Housing

Item	Description	FY2011	FY2012	FY2013	FY2014	FY2015
2.301	Modified Accelerated Cost Recovery System on Rental Housing Landlords and investors in rental housing may use accelerated methods of depreciation for new and used rental housing. Straight-line depreciation over the property's expected useful life is the generally accepted method for recovering cost, which is close to economic depreciation. However, through the past decades, systems which adopt accelerated depreciation methods have been introduced. The current system is MACRS (Modified Accelerated Cost Recovery System) which was enacted in 1986. This system further accelerated the rate of recovery of depreciation than under ACRS (Accelerated Cost Recovery System) which was enacted in 1981. Differences between MACRS and ACRS are 1) deductions from the 150% declining balance method to 200-percent declining balance; 2) certain assets were reclassified and the number of asset classes (80) was increased; and 3) the recovery period for residential rental property was extended to 27.5 years and for nonresidential real property to 31.5 years. For details, refer to the document, Background and Present Law Relating to Cost Recovery and Domestic Production Activities, which was published by the Joint Committee on Taxation in their homepage on March 6th, 2012. The excess of allowable depreciation over the generally accepted depreciation constitutes a tax expenditure, resulting in a deferral of tax or an interest-free loan. Origin: IRC S. 168 Estimate: $3.8	6.8	5.5	4.8	4.3	3.8

Key:

ORIGIN
IRC	Federal Internal Revenue Code (26 U.S.C.)
M.G.L.	Massachusetts General Laws
U.S.C	United States Code
ESTIMATES	All estimates are in $ millions.

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