Depreciating Farm Land Improvements: Fences, Wells, Drainage Tile, and Buildings
Short answer: Land itself is never depreciable. IRS Publication 225 says so directly. But many improvements on farmland may be depreciated over their own recovery periods. Under the general depreciation system (GDS), Publication 225's Table 7-1 lists agricultural fences and grain bins at 7 years, single-purpose agricultural and horticultural structures at 10 years, drainage facilities and water wells at 15 years, and other farm buildings at 20 years. Whether a specific improvement is depreciable, and how, depends on the asset and your facts.
Is farmland depreciable?
No. In the IRS's words: "You can never depreciate the cost of land because land does not wear out, become obsolete, or get used up." The cost of land generally includes the cost of clearing, grading, planting and landscaping (Pub 225, chapter 7, "What Property Cannot Be Depreciated?").
There is one nuance. Publication 946 explains that you can depreciate certain land preparation costs, such as landscaping, when they are "so closely associated with other depreciable property" that you can determine a life for them along with that property. Other land preparation costs are added to the basis of the land.
That is why, when farmland is bought, the price is split between land and each improvement. Whatever is left in "land" isn't depreciated while you own it. Publication 225, chapter 6, explains how to allocate it.
What makes a farm improvement depreciable?
To be depreciable, property must be used in your business or income-producing activity and have a determinable useful life: it must wear out, decay, get used up or become obsolete (Pub 225, chapter 7). Publication 225 applies that test to common farm improvements:
- Irrigation systems and water wells used in a trade or business can be depreciated if their useful life can be determined, including those made of masonry, concrete, tile (including drainage tile), metal or wood, and the cost of moving dirt to build them. Land preparation costs for center pivot irrigation systems are not depreciable.
- Earthen dams, ponds and terraces generally can't be depreciated unless the structure has a determinable useful life.
Recovery periods for common farm improvements (IRS Pub 225, Table 7-1)
Publication 225, chapter 7, Table 7-1, Farm Property Recovery Periods, lists these periods (in years). The rows below are copied from the current (2025) edition.
| Asset (as named in Pub 225, Table 7-1) | GDS recovery period | ADS recovery period |
|---|---|---|
| Fences (agricultural) | 7 years | 10 years |
| Grain bin | 7 years | 10 years |
| Agricultural structures (single purpose) | 10 years | 15 years |
| Horticultural structures (single purpose) | 10 years | 15 years |
| Drainage facilities | 15 years | 20 years |
| Water wells | 15 years | 20 years |
| Paved lots | 15 years | 20 years |
| Farm buildings (not including single-purpose agricultural or horticultural structures) | 20 years | 25 years |
Land does not appear in the table. GDS is the system most property uses; ADS uses longer periods and the straight line method, and it is required in some situations (see "Which depreciation method applies?" below). For assets not in Table 7-1, Publication 225 points to the Table of Class Lives and Recovery Periods in Appendix B of Publication 946.
Fences
Table 7-1 lists agricultural fences at 7 years (GDS). Publication 946 likewise includes "fences used in a farming business (but no other land improvements)" in 7-year property, while listing other fences, along with roads, sidewalks and shrubbery, among the improvements made directly to land that are 15-year property. Whether a fence is used in the farming business is the question that matters.
Drainage tile
Table 7-1 uses the term drainage facilities (15 years GDS). Publication 225 also states directly that "the recovery period for drainage tile is 15 years". Publication 225, chapter 5, says the cost of drainage tile, pipe, pumps and the work to install drainage systems must be capitalized and recovered through depreciation, not deducted as a soil and water conservation expense.
Water wells
Publication 225 says water wells used to provide water for raising poultry and livestock are land improvements and, if they are depreciable, use a 15-year GDS (or 20-year ADS) recovery period. Water wells, including drilling and equipping costs, are listed as capital expenses (Pub 225, chapter 4, "Capital Expenses").
Farm buildings and single-purpose structures
General-purpose farm buildings are 20-year property under GDS. A single-purpose agricultural (livestock) structure is 10-year property. Publication 225 defines it as a building or enclosure specifically designed, constructed and used both to house, raise and feed a particular type of livestock (including poultry) and its produce, and to house the equipment needed to do that. The equipment must be an integral part of the structure. A single-purpose horticultural structure is a greenhouse specifically designed, constructed and used for the commercial production of plants, or a structure specifically designed, constructed and used for the commercial production of mushrooms.
Use matters. Publication 225 says the structure must be used only for the purpose that qualified it: "a hog barn will not be qualifying property if you use it to house poultry."
Which depreciation method applies?
Per Publication 225, chapter 7:
- For 15- and 20-year property used in a farming business, you generally use the declining balance method that Publication 225 prescribes for that property over the GDS period, or you can elect straight line over the GDS or ADS period.
- For 3-, 5-, 7- and 10-year property used in farming and placed in service after 2017, that declining balance method is no longer required but may be elected (Publication 225, chapter 7, "Which Depreciation Method Applies?", names each method).
- ADS is required in some cases. One example is a farming business that elects out of the business interest expense limitation: it must use ADS for property with a recovery period of 10 years or more and can't claim the special depreciation allowance for that property. Another is any year when an election not to apply the uniform capitalization rules is in effect.
Can an improvement be deducted in the year it's placed in service?
Sometimes. You may be able to elect a section 179 expense deduction or claim the special depreciation allowance for qualifying property, subject to limits that depend on the property and the year it was acquired and placed in service. Publication 225 says land and most land improvements do not qualify for section 179, but "agricultural fences used to confine livestock do qualify" and "field drainage tile also qualifies." Grain bins and single-purpose agricultural or horticultural structures are also listed as qualifying property. The special depreciation allowance rules changed in 2025; Publication 225, chapter 7, and Publication 946, chapters 2 and 3, explain the current rules. Whether either applies depends on your facts.
Repairs versus improvements
Repairs to business property are generally deducted. A cost that is a betterment, restores the property or adapts it to a new or different use is an improvement and is depreciated as separate property. Publication 225's example: patching a small section of a barn roof is a repair; replacing the entire roof is an improvement.
If an improvement was never depreciated
Depreciation you were entitled to still reduces your basis, even if you didn't claim it: Publication 225 says you must reduce basis by depreciation "allowed or allowable, whichever is greater." A correction may be possible through an amended return in certain situations, such as a mathematical or posting error. If the same incorrect method was used on two or more consecutively filed returns, you have generally adopted a method of accounting, and the fix generally goes through Form 3115, Application for Change in Accounting Method, instead (Pub 225 and Pub 946, "How Do You Correct Depreciation Deductions?"). Which route applies depends on your facts, so sort it out with your CPA before anything is filed.
What to have in hand
- The depreciation schedules behind each return (Form 4562 and the detailed asset list).
- For purchased land: the purchase contract, settlement statement and any appraisal or allocation.
- Invoices for fences, tile, wells and buildings you've added, with dates placed in service.
- Maps or drawings of tile lines and water systems, if you have them.
Where DeepYield fits
DeepYield is a second set of eyes, not a replacement for your CPA. In a free two-year look-back, we do a review of your last two years of returns, done for you, including the depreciation schedules: which improvements are on them, which aren't, and what recovery periods were used. We share what we see with you and your CPA. We go looking for what's missing.
Request your free two-year look-back →
Frequently asked questions
Can you depreciate farmland?
No. IRS Publication 225 says you can never depreciate the cost of land, because land does not wear out, become obsolete or get used up. The cost of land generally includes clearing, grading, planting and landscaping. Improvements on the land, such as fences, wells, drainage tile and buildings, may be depreciable.
What is the depreciation life of a farm fence?
IRS Publication 225, Table 7-1, lists agricultural fences at 7 years under the general depreciation system (GDS) and 10 years under the alternative depreciation system (ADS). Publication 946 treats other fences as 15-year land improvements.
How long is drainage tile depreciated?
Publication 225 lists drainage facilities at 15 years under GDS (20 under ADS) and states that the recovery period for drainage tile is 15 years, including tile installed on rented land.
Are water wells on a farm depreciable?
They can be. Publication 225 says water wells used in a trade or business can be depreciated if their useful life can be determined, and that wells used to provide water for raising poultry and livestock use a 15-year GDS (20-year ADS) recovery period.
What is the difference between a farm building and a single-purpose agricultural structure?
Publication 225 lists farm buildings at 20 years and single-purpose agricultural or horticultural structures at 10 years under GDS. A single-purpose livestock structure must be specifically designed, built and used to house, raise and feed a particular type of livestock, with the needed equipment as an integral part, and used only for that purpose.
Can farm land improvements be deducted in the first year?
Some may. Publication 225 says agricultural fences used to confine livestock and field drainage tile can qualify for the section 179 deduction, and the special depreciation allowance may apply to qualifying property. Both have limits and conditions, so whether either applies depends on your facts.
What if an improvement was never depreciated?
Basis is still reduced by the depreciation you were entitled to. A correction may be possible by amended return in certain situations; if the same method was used on two or more consecutive returns, it generally goes through Form 3115 instead (IRS Pub 225 and Pub 946).
Sources
- IRS Publication 225 (2025), Farmer's Tax Guide, chapter 7 (Depreciation, Depletion, and Amortization; Table 7-1, Farm Property Recovery Periods; "What Property Cannot Be Depreciated?"; section 179 "Land and improvements"; "How Do You Correct Depreciation Deductions?"), chapter 5 (Soil and Water Conservation Expenses), chapter 4 (Farm Business Expenses: "Capital Expenses"): https://www.irs.gov/publications/p225
- IRS Publication 946 (2025), How To Depreciate Property, chapter 1 (Land), chapter 4 (property classes), Appendix B: https://www.irs.gov/publications/p946
- About Form 4562, Depreciation and Amortization: https://www.irs.gov/forms-pubs/about-form-4562
- About Form 3115, Application for Change in Accounting Method: https://www.irs.gov/forms-pubs/about-form-3115
Results depend on your specific facts. No outcome is guaranteed. This is general information, not tax advice; advice is provided only under a signed engagement.
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