Why does real property use the mid-month convention under MACRS?
I keep reaching for the half-year table because the property was placed in service during the year, but real property answers keep using mid-month.
Real property follows a different convention lane than most personal property. Residential rental property and nonresidential real property use the mid-month convention under MACRS. The convention treats the property as placed in service, or disposed of, at the midpoint of the month.
That means the month placed in service matters. A rental building placed in service in April belongs in the real-property table for the April service month. Do not switch to a half-year table just because the property was placed in service during the year.
- Related article:
cpa-macrs-property-class-convention-map - Related question-bank items:
real-property-mid-month-start,disposition-year-mid-month-proration
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