Restaurant Equipment Depreciation

Commercial Kitchen Asset Lives and MACRS Classification

Commercial kitchen equipment occupies a specific niche in MACRS that operators frequently misclassify. Ovens, ranges, and fryers—items that work hardest and wear fastest—are IRS 5-year property under Asset Class 57.0 (distributive trades and services). Refrigerated preparation tables, walk-in coolers, and dishwashers also fall in the 5-year bucket, while dining chairs, bar stools, and host stands are 7-year property.

A full commercial kitchen build-out costing $180,000 might break down as $140,000 in 5-year equipment and $40,000 in 7-year furniture—with different first-year MACRS rates applying to each pool. Under 40% bonus depreciation available in 2025, a restaurant could deduct $56,000 in the first year on equipment alone, dramatically reducing the net after-tax cost of a new kitchen installation.

Health Code Upgrades and Mandatory Capital Expenditures

Local and state health codes periodically require restaurant operators to upgrade equipment—mandating commercial dishwashers meeting NSF certification, replacing older refrigeration units that use prohibited refrigerants, or installing grease traps and ventilation hoods meeting current fire codes. These forced upgrades generate depreciable assets regardless of operator preference.

When a restaurant replaces a non-compliant grease trap at a cost of $22,000, the entire amount is capitalized and depreciated as a new 5-year asset. The undepreciated basis of the replaced grease trap—say $7,000 remaining on a unit installed three years prior—becomes a disposal loss deductible in the year of replacement. Operators should work with their accountants to ensure both the new asset's cost and the old asset's disposal are recorded in the same tax year.

Furniture Replacement Cycles and Design Refresh

Restaurant dining room furniture endures heavy daily use. An average fast-casual concept replaces chairs and tabletops every 4 to 6 years—slightly ahead of the 7-year MACRS schedule. When franchisees are required to refresh furniture as part of brand compliance, the remaining undepreciated basis of retired furniture becomes a deductible loss in the retirement year.

Tracking individual furniture purchases—even relatively inexpensive $200 chair sets—in a fixed-asset ledger pays dividends when dozens of replacements occur simultaneously during a remodel. A restaurant retiring 80 chairs with $85 of average remaining basis each generates $6,800 in aggregate disposal losses that would be missed without proper records.