How Much Does Furniture Depreciate Over Time?

Furniture loses value over time, much like cars or electronics. Whether you’re reselling old pieces, tracking business assets, or simply curious about how furniture holds its worth, understanding depreciation helps in making informed financial decisions.

The rate of depreciation depends on material quality, usage, and market demand. Various methods calculate this loss in value, and depreciation is particularly relevant for businesses in accounting and taxes.

Factors That Drive Depreciation Rates

Material quality plays a significant role. Solid wood furniture, like oak or mahogany, retains value longer than particleboard or MDF, which deteriorates quickly. Upholstered pieces lose value faster due to fabric wear, staining, and sagging cushions, while metal and glass furniture hold value better if undamaged.

Usage frequency also impacts depreciation. Office chairs and desks used daily in a corporate setting wear out faster than a guest room dresser that sees occasional use. High-traffic environments like restaurants and hotels accelerate wear and tear, reducing resale value more quickly than residential furniture. Sunlight, humidity, and temperature fluctuations cause fading, warping, or cracking, further decreasing value.

Market demand influences depreciation as well. Trend-driven designs, such as contemporary pieces with bold colors, may become outdated within a few years, while classic styles like mid-century modern or antique reproductions hold value longer. Brand reputation matters too—high-end manufacturers like Herman Miller or Stickley depreciate more slowly than mass-produced furniture from budget retailers.

Common Depreciation Methods

Furniture depreciation is calculated using different accounting methods, each affecting how value is allocated over time. Businesses and individuals tracking asset depreciation typically use straight-line, declining-balance, or units-of-production methods, depending on financial reporting needs, tax implications, and expected usage patterns.

Straight-Line

The straight-line method spreads depreciation evenly over the furniture’s useful life, making it a common choice for financial statements due to its simplicity. The formula is:

Annual Depreciation Expense = (Cost of Furniture – Salvage Value) / Useful Life (in years)

For example, if a business purchases an office desk for $2,000, expects it to last 10 years, and estimates a salvage value of $200, the annual depreciation expense would be:

(2,000 – 200) / 10 = $180 per year

This method provides predictable depreciation expenses for budgeting and tax purposes. The IRS allows straight-line depreciation for furniture under the Modified Accelerated Cost Recovery System (MACRS), typically assigning a seven-year recovery period.

Declining-Balance

The declining-balance method accelerates depreciation, meaning furniture loses more value in the early years. This approach benefits businesses by allowing larger deductions sooner. The most common variation, the double-declining balance (DDB) method, applies twice the straight-line rate to the asset’s remaining book value each year.

The formula for DDB depreciation is:

Depreciation Expense = (2 / Useful Life) × Book Value at Beginning of Year

If a company buys a $3,000 conference table with a seven-year useful life, the first year’s depreciation would be:

(2 / 7) × 3,000 = $857.14

Each subsequent year, depreciation is calculated on the remaining book value, leading to a decreasing expense over time. The IRS permits businesses to use the 200% declining-balance method under MACRS, making it a popular choice for tax savings.

Units-of-Production

The units-of-production method ties depreciation to actual usage rather than time. This approach is useful for businesses where wear and tear depend on usage frequency, such as rental companies or co-working spaces. The formula is:

Depreciation Expense = [(Cost – Salvage Value) / Total Estimated Usage] × Units Used in Period

For example, if a company purchases 50 office chairs for $10,000, expects them to last 100,000 hours, and estimates a salvage value of $1,000, the per-hour depreciation rate would be:

(10,000 – 1,000) / 100,000 = $0.09 per hour

If the chairs are used for 10,000 hours in a year, the depreciation expense for that period would be:

0.09 × 10,000 = $900

This method provides a more accurate reflection of asset value for businesses with fluctuating furniture usage but requires detailed tracking, making it less practical for general accounting.

Typical Lifespans for Accounting Purposes

The expected lifespan of furniture for accounting purposes varies based on regulatory guidelines, industry standards, and practical considerations. Businesses must estimate how long an asset will provide economic benefits to determine depreciation schedules and asset replacement planning.

For corporate accounting, the IRS assigns a seven-year recovery period for most office furniture under MACRS, including desks, shelving, filing cabinets, and conference tables. Specialty furniture, such as built-in fixtures or laboratory workstations, may have longer depreciation periods.

Retail and hospitality industries often apply shorter useful life estimates due to high turnover. Hotels may depreciate mattresses and seating over five to six years, reflecting wear from constant guest use. Restaurants frequently replace booths and bar stools within three to five years to maintain aesthetics and functionality. In contrast, high-end law firms or executive offices may extend the useful life of luxury furniture to 10–15 years, particularly for custom-built pieces that are well-maintained.

Public sector entities and nonprofit organizations follow different guidelines, often referencing Governmental Accounting Standards Board (GASB) Statement 34, which suggests useful lives ranging from five to 20 years, depending on the type of furniture. Educational institutions may assign a 10-year lifespan to classroom furniture, while libraries might budget for shelving units lasting up to 15 years due to their durable construction.

Tax Considerations for Depreciating Furniture

Businesses can claim furniture depreciation as a tax deduction, reducing taxable income over multiple years. The IRS classifies furniture as Section 1245 property when used in a trade or business, allowing depreciation under MACRS. Using the 200% declining balance method, businesses can front-load deductions in the early years before switching to straight-line depreciation. The standard recovery period is seven years, but bonus depreciation and expensing options can accelerate write-offs.

Under Section 179, businesses can immediately deduct the full cost of qualifying furniture in the year it is placed into service instead of depreciating it over time. For the 2024 tax year, the maximum deduction limit is $1.22 million, with a phase-out threshold starting at $3.05 million in total qualifying purchases. However, Section 179 applies only if the furniture is used for business purposes more than 50% of the time. If usage falls below this threshold in later years, previously claimed deductions may be subject to recapture.

Bonus depreciation, governed by Section 168(k), allows businesses to deduct 60% of the furniture’s cost in the first year for assets placed in service during 2024. Unlike Section 179, bonus depreciation has no spending cap and can be used even if the business operates at a loss, making it useful for startups or companies with fluctuating profitability. However, the deduction percentage has been decreasing since 2023 and is scheduled to phase out entirely by 2027, barring legislative changes.

Calculating Resale Value After Depreciation

Determining the resale value of furniture after depreciation requires assessing both its book value and market demand. While accounting depreciation provides a structured way to allocate cost over time, actual resale prices depend on condition, brand reputation, and buyer interest.

One approach is to use the net book value (NBV), which represents the original purchase price minus accumulated depreciation. If a company purchased a $5,000 executive desk and applied straight-line depreciation over seven years with no salvage value, its NBV after five years would be:

5,000 – [(5,000 / 7) × 5] = $1,428.57

However, NBV does not always align with market resale prices. High-end brands like Knoll or Steelcase may retain more value due to demand, while mass-produced furniture often sells for less than its depreciated value. Online marketplaces, auction sites, and liquidation sales provide insight into real-world pricing trends. Condition also plays a major role—well-maintained furniture with minimal wear commands higher resale prices, while damaged or outdated pieces may only fetch a fraction of their book value.