Can You Depreciate a Barn?

Since barns have a limited lifespan before falling into disrepair, the U.S. government allows businesses who build or purchase them to gradually decrease their cost basis in barns through a process known as depreciation. U.S. taxpayers can take a tax deduction for barn depreciation over an established period of years, and they may qualify for accelerated depreciation as of the 2011 tax year, according to the Internal Revenue Service.

In order to claim depreciation on a barn, a U.S. resident must use the barn as part of his business or to generate income. If he uses the property for both business and personal purposes, such as to both store hay for feeding beef cattle and to store personal tools, he can only depreciate the percentage of the barn he uses for business purposes. He cannot take a depreciation deduction for land that the barn sits on or equipment used to build the barn, according to the IRS.

A taxpayer can only take depreciation for his cost basis in the barn, defined as total costs of construction, including materials, permits, material delivery charges and installation, plus any improvements that enhance the value of the barn. A taxpayer cannot depreciate the costs of repairs to a barn. If he receives a barn as a gift or receives reimbursement for the costs of his barn from another party, he cannot depreciate it.

Barn owners will usually depreciate the cost of their barns over 20 years, allowing them to take a deduction for 5 percent of their cost basis per year, according to Virginia Cooperative Extension. As of 2011, the U.S. government allows taxpayers to take a 50 percent special depreciation allowance in a single tax year for the costs of constructing a barn as long as they do not build and then sell the barn in the same tax year. Taxpayers who take the special depreciation allowance will deduct the other 50 percent of their cost basis over 19 years.

Barn owners can take a full depreciation of their cost basis in a single year if they use the barn to house, raise and feed a type of livestock, whether they use the barn for the production of food or breeding livestock. A barn used for storing grain or hay does not qualify for single year depreciation. The U.S. government limits deductible depreciation to $500,000 for equipment purchased in 2011, according to Section 179.