How does the MACRS Mid-Month Convention treat buildings?

The MACRS Mid-Month Convention treats buildings as if they were purchased in the middle of the month. This approach is used to more accurately allocate depreciation for property, particularly for real estate, which has a longer useful life compared to personal property.

Under this convention, the depreciation calculation assumes the asset is acquired and put into service at the midpoint of the month, allowing for a more straightforward method to compute deductions. This helps ensure that the depreciation expense over the time the asset is held aligns more closely with its actual usage and economic lifespan.

By offsetting the timing of the depreciation with this mid-month assumption, the MACRS system can provide a standardized approach for buildings and certain other real property, simplifying tax computations and record-keeping for businesses. This approach contrasts with other treatments, such as treating assets as if they were disposed of or purchased at different calendar points, which would not reflect the actual use of the asset.