MACRS consists of two systems that determine how you depreciate your property—the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). You must use GDS unless your are specifically required by law to use ADS or you elect to use ADS.
You cannot use MACRS for certain personal property (such as furniture or appliances) placed in service in your rental property in 2012 if it had been previously placed in service before 1987 when MACRS became effective.
In most cases, personal property is excluded from MACRS if you (or a person related to you) owned or used it in 1986 or if your tenant is a person (or someone related to the person) who owned or used it in 1986. However, the property is not excluded if your 2012 deduction under MACRS (using a half-year convention) is less than the deduction you would have under ACRS. For more information, see What Method Can You Use To Depreciate Your Property? in Publication 946, chapter 1.
If you choose, you can use the ADS method for most property. Under ADS, you use the straight line method of depreciation.
The election of ADS for one item in a class of property generally applies to all property in that class that is placed in service during the tax year of the election. However, the election applies on a property-by-property basis for residential rental property and nonresidential real property.
If you choose to use ADS for your residential rental property, the election must be made in the first year the property is placed in service. Once you make this election, you can never revoke it.
For property placed in service during 2012, you make the election to use ADS by entering the depreciation on Form 4562, Part III, Section C, line 20c.