Property types
Property types we analyze
Every building type has its own mix of structure, systems, finishes, and site work. Here is how cost segregation tends to differ across common property categories.
Multifamily & residential rentals
Residential rental buildings are generally recovered over 27.5 years. Studies often look at unit finishes and fixtures, appliances, and site work such as paving, landscaping, and site utilities.
Office & mixed-use
Office buildings are generally 39-year property. In mixed-use buildings, how the space is used can decide whether the building is treated as residential or nonresidential, which changes its recovery period.
Retail & restaurants
Store and restaurant build-outs can include decor, millwork, and electrical or plumbing that serve equipment rather than the building. The IRS audit guide has separate matrices for retail and restaurants.
Industrial, warehouse & self-storage
Studies focus on site work and on systems that serve production equipment. Some manufacturing buildings may also qualify for the new elective 100% allowance for qualified production property.
Hospitality & healthcare
Hotels and medical facilities often have equipment-heavy spaces. Hospital Corporation of America v. Commissioner, a Tax Court case involving hospitals, is a leading decision on separating equipment-related systems from the building.
Specialty & other commercial
Auto dealerships, data centers, and other specialty buildings each raise their own questions. The analysis follows the function of each component, not the building's label.
Classification
Why the property type is only a starting point
A component does not qualify for a shorter recovery period just because it appears in a certain kind of building. The same electrical circuit can be part of the building in one property and dedicated to equipment in another. What matters is what the item does, how it is installed, and what the records show.
The IRS Cost Segregation Audit Techniques Guide includes industry matrices for several property types, including retail, restaurants, auto dealerships, and residential rental property. They show how examiners tend to view common items, but the guide itself says it is not an official statement of law.
See how cost segregation works for the classification basics.
Property guides
- Property guidesCompany educational explanation
Single-Family Rental Properties
A house held out for rent is usually 27.5-year residential rental property when the §168(e)(2) dwelling-unit test is met. The IRS residential rental matrix then separates appliances, some floor coverings, and site work from the dwelling itself. This page is educational information, not tax advice.
Read articleOpen - Property guidesCompany educational explanation
Multifamily Apartment Buildings
Garden and mid-rise apartments that meet the 80% dwelling-unit test are 27.5-year residential rental property. A stand-alone clubhouse or leasing office on the same site is 39-year property in the IRS residential matrix. AmeriSouth is the caution case for aggressive apartment component lists.
Read articleOpen - Property guidesCompany educational explanation
Condominiums and Townhomes
A rented condominium unit is analyzed as residential rental property only if the owner’s activity meets the §168(e)(2) dwelling-unit test. The IRS residential matrix names condos, but association-owned common elements are a separate ownership question. This page is educational information, not tax advice.
Read articleOpen - Property guidesCompany educational explanation
Build-to-Rent Communities
Purpose-built rental houses and duplexes are classified by use and ownership, not by the build-to-rent label. Dwelling buildings that meet the 80% test are generally 27.5-year property; shared amenities and streets are separate buildings or site work. There is no IRS build-to-rent matrix.
Read articleOpen - Property guidesCompany educational explanation
Student Housing
Purpose-built student housing may be residential rental property or transient lodging, depending on how the units are used. Section 168(e)(2) and Publication 527 supply the test; no IRS student-housing matrix was found. Confirm the building class with a CPA before classifying furniture.
Read articleOpen - Property guidesCompany educational explanation
Senior Living Facilities
Independent-living campuses mix dwelling units with dining, clinic, and office buildings. Residential versus nonresidential classification follows the §168(e)(2) 80% dwelling-unit test, which this page describes but does not decide. No IRS senior-living matrix was found.
Read articleOpen - Property guidesCompany educational explanation
Assisted Living Facilities
Assisted living sits between housing and healthcare. Whether a building is 27.5-year residential rental property depends on the §168(e)(2) dwelling-unit test, which this page describes and does not decide. No IRS assisted-living matrix was found.
Read articleOpen - Property guidesCompany educational explanation
Hotels and Resorts
Hotels are generally 39-year nonresidential real property because transient lodging is excluded from the dwelling-unit definition. Guest-room furniture is 5-year property in the IRS casino and hotel matrix. That matrix is examiner guidance written for hotel/casino complexes, not a statute for every resort.
Read articleOpen - Property guidesCompany educational explanation
Motels and Extended-Stay Properties
Motels follow hotel treatment when occupancy is transient: the building is generally 39-year property. Extended-stay products add kitchens and longer stays, which can change facts for the dwelling-unit test but are not a published IRS category. Confirm the test with a CPA.
Read articleOpen - Property guidesCompany educational explanation
Restaurants and Fast-Food Properties
Restaurant buildings are generally 39-year nonresidential real property. The IRS restaurant matrix is one of the most detailed industry tables: kitchen equipment and dedicated hook-ups are 5-year there; central HVAC is building. Rev. Proc. 2002-12 is a smallwares expensing method, not a 15-year building rule.
Read articleOpen - Property guidesCompany educational explanation
Office Buildings
Office buildings are generally 39-year nonresidential real property. There is no IRS office matrix. Metro National classified some partitions and lighting as personal property on one owner’s facts. Later interiors may be qualified improvement property if §168(e)(6) is met.
Read articleOpen - Property guidesCompany educational explanation
Medical and Healthcare Facilities
Hospitals, imaging centers, and medical office buildings are generally 39-year nonresidential real property. HCA is the leading hospital classification case. There is no IRS medical-office matrix. Equipment is typically personal property; the rooms around it often are not.
Read articleOpen - Property guidesCompany educational explanation
Retail Stores
Retail buildings are generally 39-year nonresidential real property. The IRS retail matrix covers department and grocery stores: fixtures and strippable floor covering are 5-year there; ceramic tile and parking structures are building. The matrix is examiner guidance from a 2004 field directive.
Read articleOpen - Property guidesCompany educational explanation
Shopping Centers
A shopping center is a group of 39-year buildings plus 15-year site work. The retail matrix is the closest IRS table, written for department and grocery stores. Who owns the interior work decides whose basis it is, and a written purchase allocation can bind the parties under Peco Foods.
Read articleOpen - Property guidesCompany educational explanation
Warehouses
Warehouse shells are generally 39-year nonresidential real property. There is no IRS warehouse matrix. Rack systems and material-handling equipment are usually personal property; dock structure is usually building. A warehouse used only for storage is not qualified production property.
Read articleOpen - Property guidesCompany educational explanation
Distribution Centers
Fulfillment and distribution buildings mix a 39-year shell with extensive material-handling systems. Classification follows function, not the word automation. There is no IRS distribution-center matrix. Conveyors and AS/RS equipment are typically personal property; the shell is not.
Read articleOpen - Property guidesCompany educational explanation
Self-Storage Facilities
Self-storage buildings are generally 39-year nonresidential real property. Unit partitions, site paving, and office fit-out are the usual study lines. No IRS self-storage matrix was found. This page does not decide whether unit walls are structural components.
Read articleOpen - Property guidesCompany educational explanation
Manufacturing Facilities
Process equipment is personal property. The factory building is 39-year property unless an elective qualified-production-property allowance applies to a qualifying portion. Section 168(n) is temporary, elective, and excludes office, parking, sales, and research space. This page draws no eligibility conclusion.
Read articleOpen - Property guidesCompany educational explanation
Automotive Dealerships
Dealership buildings are generally 39-year property. The IRS auto-dealership matrix is specific: showroom display lighting and merchandise-lot lighting can be 5-year; floor-pit structure is building. Bollards are classified by what they protect.
Read articleOpen - Property guidesCompany educational explanation
Auto Repair Facilities
Standalone repair shops share pit, lift, and exhaust issues with dealership service bays. There is no separate IRS repair-shop matrix. Lifts are tangible personal property under the regulation; the pit structure is building in the dealership matrix. Quick-lube canopies are not automatically 5-year property.
Read articleOpen - Property guidesCompany educational explanation
Gas Stations and Convenience Stores
A qualified retail motor-fuels outlet can be 15-year section 1250 property under §168(e)(3)(E)(iii). Rev. Rul. 2003-54 treats typical stand-alone pump canopies as 5-year property and their footings as 15-year land improvements. Rev. Proc. 97-10 is a historical election for older stations, not a restaurant rule.
Read articleOpen - Property guidesCompany educational explanation
Data Centers
Data halls mix a 39-year shell with large amounts of process electrical, cooling, and raised-floor equipment. There is no IRS data-center matrix. Sole-justification cooling and dedicated process power need engineering support. Life-safety generators are building in other matrices; process generators are closer to equipment.
Read articleOpen - Property guidesCompany educational explanation
Mixed-Use Buildings
A building with apartments over retail can be residential rental, nonresidential, or more than one building for tax purposes. The 80% dwelling-unit test in §168(e)(2) is the starting point. Getting 27.5 versus 39 wrong dominates any later component study.
Read articleOpen - Property guidesCompany educational explanation
Parking Structures and Garages
Stand-alone parking garages are buildings under Treas. Reg. §1.48-1(e)(1) and the IRS retail matrix, recovered over 39 years. Surface lots are 15-year land improvements. ATG Chapter 8.B rejects 15-year treatment of open-air parking structures and mentions penalties.
Read articleOpen - Property guidesCompany educational explanation
Specialty and Recreational Properties
Gyms, theaters, bowling centers, and similar buildings are usually 39-year property unless a specific activity class applies. Publication 946 class 79.0 is 7-year recreation property and excludes golf courses, stadia, and the buildings that house the assets. The casino matrix is the only recreation-heavy ATG table.
Read articleOpen
References
Sources
- 126 U.S.C. §168 — Accelerated cost recovery system (MACRS)(opens in a new tab)
Recovery periods, including 27.5-year residential rental and 39-year nonresidential real property, and bonus depreciation in §168(k).
- 2IRS Publication 5653 — Cost Segregation Audit Techniques Guide (rev. 2-2025)(opens in a new tab)
Guidance written for IRS examiners. The guide states it is not an official pronouncement of law.
- 3IRS Notice 2026-16 — Qualified production property (§168(n))(opens in a new tab)
Interim guidance on the elective 100% allowance for certain manufacturing and production buildings.
- 4
Discuss your property
Share basic contact and property details. We’ll follow up on next steps for a potential cost segregation study.