straight-line method of depreciation

The difference between the present value of the double declining method of depreciation and that of the economic depreciation or the straight-line method of depreciation, multiplied by the tax rate, is the tax advantage of the declining balance method.

Ordinarily, the cost of real, or section 1250, property is recovered over lengthy periods (27.5 and 39 years for residential and nonresidential property, respectively), using the straight-line method of depreciation. Personal, or section 1245, property is recovered over considerably shorter periods (5, 7 or 15 years), and employs accelerated or "front-end loaded" methods of depreciation, such as 200% or 150% declining balance.

Straight-line method of depreciation with a 39-year life must be used for the real estate portion of the home office deduction.

The straight-line method of depreciation must be used for both categories of property.

Under both the allocation method and the simplified method, the taxpayer must switch to the straight-line method of depreciation in the first tax year that the straight-line method produces a larger depreciation allowance.