How is Class Life or Useful Life Determined for an Asset?

The Class Life or Useful Life of a fixed asset is the number of years over which an asset can be depreciated. Class life is determined by tax law which defines a specific number of years to each type of depreciable asset.

What is a Fixed Asset?

Fixed Asset is a long-term asset (or non-current asset), one that a business will hold for longer than a year. These are permanent, tangible items the business intends to own long-term (more than a year). Examples of Fixed Assets are Vehicles, Buildings, Equipment. These Fixed Assets may be referred to as Property, Plant, and Equipment assets or PP&E. They are used in normal business operations. Fixed Assets depreciate over time.

The most common classes of fixed assets and the related class life are listed below:

Common Fixed AssetsClass or Useful Life
Cars, trucks, buses, appliances in a rental house5 years
Office furniture, Fixtures, Equipment, machinery7 years
Residential rental property27.5 years
Nonresidential real property39 years
Table showing common fixed assets and the class life assigned to each by tax law.

For a deeper understanding about depreciation, read this article:

Caroline Grimm

Caroline Grimm is an accounting educator and a small business enthusiast. She holds Masters and Bachelor degrees in Business Administration. She is the author of 13 books and the creator of Accounting How To YouTube channel and blog. For more information visit:

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