Is equipment depreciated over 5 or 7 years?

It depends on whether the equipment is new or used: new farm machinery and equipment is generally 5-year property under MACRS, while used farm machinery and equipment is 7-year property.

The IRS farm tax guide's recovery period tables draw this line specifically for tax depreciation purposes. If you bought a new tractor, combine, or planter, it typically falls into the 5-year class using the General Depreciation System (GDS), with a 10-year option under the Alternative Depreciation System (ADS). If you bought that same type of equipment used, it generally shifts to the 7-year GDS class (also 10 years under ADS). For property placed in service after 2017, the default method within these classes is usually 200% declining balance under GDS, unless a specific election changes that.

This distinction matters most when you're planning a purchase, filing taxes, or documenting equipment value for a lender, insurer, or the IRS. A few practical notes:

• Mixed fleets get complicated fast. A farm with a new combine, a used tractor, and older grain-handling equipment may have assets split across both classes, plus different placed-in-service dates affecting the calculation.
• Depreciation schedules and appraised value aren't the same thing. Book value under MACRS reflects a tax formula, not what the equipment would actually sell for or its fair market value today.
• Documentation matters for both purposes. Accurate purchase dates, condition records, and valuations support your depreciation schedule and hold up if the IRS, a lender, or an insurer asks questions.

If you need a defensible valuation to support a loan application, estate settlement, or insurance claim, a professional farm equipment appraisal establishes current fair market value independent of your tax depreciation schedule. For related tax questions, see how much you can write off for farm equipment.

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