Single Purpose Agricultural Structure: MACRS and Section 179

A single-purpose agricultural structure depreciates over 10 years under MACRS, and because it is classified as Section 1245 property rather than a building, it also qualifies for immediate Section 179 expensing and 100% bonus depreciation.¹ In practice, most farmers who put up a qualifying livestock or horticultural structure today write off the entire cost in the year it goes into service. General-purpose farm buildings, by contrast, sit on a 20-year schedule and cannot be expensed under Section 179.

The trade-off is on the back end: fast write-offs mean any gain when you sell the structure comes back as ordinary income through depreciation recapture, not capital gain.

What Counts as a Single Purpose Structure

IRC Section 168(i)(13) recognizes two categories: single purpose livestock structures and single purpose horticultural structures.² A livestock structure must be designed, built, and used to house, raise, and feed one particular type of livestock (poultry counts as livestock). A horticultural structure is either a greenhouse used for commercial plant production or a structure used for commercial mushroom production.

Two rules do the real work. First, the building has to be so specialized that it would not be economical to build it and then convert it to something else. The IRS regulation uses a hog-raising facility built to standard USDA plans as its illustration. Second, the use has to be exclusive. There is no primary-use standard and no percentage threshold; if the building serves both a qualifying and a non-qualifying purpose, the whole structure fails.³

Some work space inside is allowed, but only for stocking, caring for, or collecting the livestock or plants, maintaining the building, or servicing housed equipment. Processing, packaging, marketing, or retail sales inside the structure disqualifies it.² Storing feed or equipment is permitted only on a “strictly incidental” basis. Parking a tractor in the poultry house through the winter because there’s room is the sort of thing that starts to look like a non-qualifying use, and the regulation gives no bright-line percentage. Keeping unrelated equipment out entirely is the safe posture.

General-purpose barns, machine sheds, shops, processing buildings, farm offices, and residences don’t qualify and don’t get the treatment described below. They depreciate on the ordinary 20-year farm-building schedule (or the 39-year nonresidential real property schedule for buildings that aren’t farm structures at all).

The 10-Year MACRS Schedule

Under MACRS, single purpose agricultural structures are 10-year property. For 10-year farm property placed in service after 2017, the default General Depreciation System method is 200% declining balance. Farmers were previously required to use the slower 150% declining balance method, but the Tax Cuts and Jobs Act removed that requirement; 150% remains available as an election if you want smaller, more even deductions.⁴ Under the Alternative Depreciation System, the recovery period is 15 years, straight-line.¹

Compared with the 20-year schedule for a general-purpose farm building, the 10-year classification alone roughly doubles the annual deduction rate. That said, most new structures never see a full year of standard MACRS, because Section 179 and bonus depreciation usually finish the job in year one.

Section 179 Expensing

Single purpose agricultural and horticultural structures are among the few farm buildings eligible for Section 179 expensing.¹ For 2026, the Section 179 deduction limit is $2,560,000, and it begins to phase out dollar for dollar once total qualifying property placed in service during the year exceeds $4,090,000. The deduction is claimed on Form 4562.⁵

There is one limit that matters more than the dollar caps for most farmers: the Section 179 deduction cannot exceed your taxable business income for the year. A $600,000 structure with $400,000 of taxable farm income yields a $400,000 Section 179 deduction, and the remaining $200,000 carries forward. That’s the gap bonus depreciation is designed to fill.

100% Bonus Depreciation

For property acquired and placed in service after January 19, 2025, 100% bonus depreciation is permanently available for eligible assets under the One, Big, Beautiful Bill.⁶ A qualifying single purpose structure can be deducted in full in the year it is placed in service.

Unlike Section 179, bonus depreciation has no dollar cap and no taxable-income limitation. It can create or enlarge a net operating loss, which farmers can carry back two years to recover previously paid tax or carry forward to offset later income. In a big-investment year with lower-than-usual farm income, that flexibility can matter more than the deduction itself.

Bonus depreciation is elective by class. You can elect out for any class of property, but the election covers every asset in that class placed in service during the year — you cannot take bonus on one 10-year structure and skip another. A common sequencing is to apply Section 179 first to bring taxable income to zero, then let bonus depreciation run on remaining assets to generate an NOL for carryback.

Recapture When You Sell or Convert

Section 1245 is what makes the accelerated write-offs available, and it’s also what makes the sale expensive. Depreciation recapture on Section 1245 property is taxed as ordinary income, at rates up to 37% for individuals.⁷ Recapture on Section 1250 real property is generally capped at 25%, so the faster you write the structure off, the larger the potential ordinary income when you sell.

The recapture amount is the lesser of the total depreciation claimed or the gain realized. If you fully expensed a $500,000 hog confinement building in year one and later sell it for $200,000, the entire $200,000 is ordinary income. You report the calculation on Form 4797, Part III.⁸ Transfers at death, gifts, and qualifying like-kind exchanges under Section 1031 are not subject to recapture.

Converting the building to a non-qualifying use is its own trap. If a single purpose structure stops being used exclusively for its qualifying purpose before its useful life ends, any investment tax credit previously claimed may be recaptured. The regulation is explicit that even switching between two permissible uses — a hog facility to a poultry house, for example — can trigger recapture.³ After conversion, the building is reclassified as general-purpose farm property and any remaining basis depreciates on the longer 20-year schedule.

Records to Keep

The exclusive-use and specialized-design requirements put the burden of proof on you if the IRS challenges the classification. Keep the following from the start of the project through the life of the structure:

Architectural plans and construction specifications showing species-specific features such as ventilation, watering lines, manure handling, or climate controls. USDA or industry plans for a specific operation are strong evidence.³
Contractor invoices and material lists documenting specialized equipment installed at construction, such as feeding systems, milking parlors, or climate-controlled growing systems.
Annual use logs recording what the structure housed each year and confirming no non-qualifying activities took place inside.
Photos at completion and periodically thereafter showing the interior layout, installed equipment, and livestock or plants in use.

The IRS can audit a deduction for three years, or longer if there’s a substantial understatement, so records need to last at least that long. Given the recapture rules on sale or conversion, keeping them for the full life of the structure is safer.

1
Internal Revenue Service. Publication 225 – Farmer’s Tax Guide
2
Office of the Law Revision Counsel. 26 U.S. Code 168 – Accelerated Cost Recovery System
3
eCFR. 26 CFR 1.48-10 – Single Purpose Agricultural or Horticultural Structures
4
Internal Revenue Service. Publication 946 – How To Depreciate Property
5
Internal Revenue Service. About Form 4562 – Depreciation and Amortization
6
Internal Revenue Service. Guidance on Additional First Year Depreciation Deduction
7
Office of the Law Revision Counsel. 26 USC 1245 – Gain from Dispositions of Certain Depreciable Property
8
Internal Revenue Service. Instructions for Form 4797