Under MACRS, which statement correctly describes depreciation for commercial real estate?

• A. Depreciation is not allowed for CRE
• B. Land is depreciated, buildings are not
• C. Buildings are depreciated over 39 years; land is not
• D. Buildings are depreciated over 39 years; land depreciated

Answer: (C)

The key idea is how MACRS handles depreciation for nonresidential (commercial) real estate: you recover the cost of the building over a long, fixed period, while land itself does not get depreciation.

Under MACRS, commercial real estate is depreciated over 39 years. This means the building portion of the cost basis is recovered gradually through depreciation deductions on a straight‑line schedule over those 39 years. Land, on the other hand, has an indefinite life and isn’t depreciable, so it isn’t included in the depreciation deduction. When you buy property, you must allocate the purchase price between land (not depreciable) and building (depreciable), and any improvements can have their own depreciation lives.

So the correct statement reflects that buildings are depreciated over 39 years and land is not depreciated. The other ideas—depreciation not allowed, land being depreciated, or both being depreciated—don’t fit how MACRS treats commercial property.