Registered Tax Return Preparer RTRP Practice Exam

The recovery period for residential real property is established as 27.5 years. This period is significant because it represents the time frame over which the cost of such property can be depreciated for tax purposes. Residential real property refers to buildings that are primarily used for residential purposes, such as rental homes and apartment complexes.

Understanding this recovery period is essential for tax preparers as it affects how clients report depreciation on their tax returns, potentially impacting the taxable income and overall tax liability.

The other options indicate different recovery periods typically associated with different types of assets or property, which are not applicable to residential real property. For example, 25 years might pertain to certain qualified improvement property, while 30 years may be relevant to other specific real property classifications. The 27.5 years is specifically designated for residential rental property, which is why it is the correct choice here.