What is the depreciation schedule for residential rental property versus commercial real estate under current IRS rules?

Under the IRS MACRS system, residential rental buildings (those where 80% or more of gross income comes from dwelling units) are depreciated over 27.5 years using the straight-line method. Commercial real estate uses a 39-year straight-line schedule. Only the building value is depreciable; land is excluded. For a residential property with $275,000 allocated to the building, the annual depreciation deduction is $10,000 per year, which shelters that much rental income from taxes each year. Upon sale, this accumulated depreciation is subject to Section 1250 unrecaptured depreciation recapture tax at a maximum rate of 25%.