Parking Lots, Sidewalks and Paving
Surface parking, sidewalks, curbs, and landscape islands are land improvements in IRS examiner matrices and in class 00.3 as reproduced in Publication 946. Paved parking areas are not tangible personal property under Treas. Reg. §1.48-1(c). Parking structures are buildings. Land is not depreciable. Educational information, not tax advice.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- Section 1.48-1(c) lists paved parking areas among items that are not tangible personal property.
- Class 00.3 land improvements — sidewalks, roads, drainage, fences, landscaping — have a 15-year GDS recovery in Publication 946 Appendix B, excluding buildings and structural components.
- The retail matrix includes striping, curbs, landscape islands, perimeter fences, and sidewalks with the lot as class 00.3, and treats parking structures as 39-year buildings.
- Rev. Rul. 2003-81 can move a plant-related lot into an activity class that specifically includes related land improvements.
- Stand-alone open-air parking structures are buildings in Publication 5653 Chapter 8.B, not 15-year lots.
Asphalt and concrete on grade are the classic site items in a cost segregation study. They are not the building, and they are not personal property. Treas. Reg. §1.48-1(c) says buildings, swimming pools, paved parking areas, wharves and docks, bridges, and fences are not tangible personal property. A building under section 1.48-1(e)(1) includes garages and structures used to provide parking space. Structural components are parts of that building. A surface lot is an improvement to land. Hospital Corp. of America applied these definitions under MACRS for items inside buildings; site paving is classified through the land-improvement classes.
Publication 946 Appendix B reproduces Rev. Proc. 87-56 class 00.3. Rev. Rul. 2003-81 quotes it: depreciable improvements directly to or added to land, including sidewalks, roads, drainage facilities, sewers other than municipal sewers, fences, landscaping, and shrubbery, with a 15-year GDS period and a 20-year ADS period, excluding buildings and structural components as defined in section 1.48-1(e). Land itself is not depreciable. Publication 5653’s retail matrix treats parking lots, including striping, curbs, landscape islands, perimeter fences, and sidewalks, as section 1250 class 00.3 property, and parking structures as 39-year buildings. Truck courts and pharmaceutical staging areas are placed in 00.3 in those tables. Those rows are examiner guidance for those industries.
Whiteco’s six permanence factors are a court test for inherently permanent structures, not a statute. A parking lot is designed to remain, is hard to remove, and is affixed to the land. Rev. Rul. 2003-54 used those factors to treat canopy footings as inherently permanent while the canopy was personal property. Paving is on the footings side of that comparison. Do not write that a surface lot is five-year property because cars park on it.
Rev. Rul. 2003-81 shows that activity class can override 00.3 when the activity class specifically includes related land improvements. A lot next to a steam-production plant fell in class 49.13; a headquarters lot 100 miles away stayed in 00.3. Petroleum-marketing land improvements can fall in class 57.1. Theme-park class 80.0 includes park land improvements. Check the activity class before assuming every driveway is 00.3.
Publication 5653 Chapter 8.B treats stand-alone open-air parking structures as buildings and says penalties should be strongly considered for 15-year positions on those structures. The residential matrix treats attached residential parking as residential rental property and a stand-alone parking structure as nonresidential. AmeriSouth involved site work among many claimed short-life items; most building components stayed with the apartments. Site paving still has to be identified and costed, not assumed as a percentage of the purchase price.
Lot versus garage
A surface lot, including striping and curbs, is the 00.3 row in the retail matrix. A garage enclosing parking space is a building under section 1.48-1(e)(1). Podium parking under apartments can be residential rental property when attached, per the residential matrix. Do not drop a structure into the sidewalk class.
What travels with the lot
The retail matrix groups striping, curbs, landscape islands, perimeter fences, and sidewalks with the lot. Pole-mounted site lighting is commonly discussed with land improvements. Building-mounted wall packs that light an exit are closer to building lighting. Photograph the mounting.
Repairs to pavement
Sealcoating and striping can be repairs to the lot as a unit of property. A full reconstruction is a restoration under Treas. Reg. §1.263(a)-3. Classification of a new lot as class 00.3 assumes the cost was capitalized. Land under the lot remains non-depreciable.
Land preparation
Publication 5653 tells examiners that site preparation and general grading are generally non-depreciable land, and that land preparation should be allocated among land, building, and depreciable land improvements. Before-and-after photographs help. A pro-rata step-up of estimates to force a purchase-price tie-out is not an acceptable method in that guide.
Documentation
Civil drawings, paving quantities, striping plans, and a land-versus-improvement split belong in the file. Truck courts, sidewalks, and a podium garage should not share one paving lump. Chapter 3 cost methods, including detailed engineering from actual costs and published unit-cost estimates examiners have seen, are study approaches described in the guide, not operational CostSeg SI product claims. Super Intelligence extraction is proposed. This page is educational information, not tax advice.
Sources
- 1IRS Publication 946 — How To Depreciate Property (2025)(opens in a new tab)
Appendix B reproduces the Rev. Proc. 87-56 class lives.
- 2IRS Publication 5653 — Cost Segregation Audit Techniques Guide (rev. 2-2025)(opens in a new tab)
Written for IRS examiners. The guide states it is not an official pronouncement of law and cannot be cited as authority. It predates the July 2025 law.
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