Probably a silly question
In what cases are multifamily buildings considered to be commercial real estate?
I have asked this question to several people and have received conflicting answers.

Thanks
[{"id": "cnq5wyb", "text": "Anything above 4 units is typically considered commercial from what I've seen.  Maybe depending upon where you're located this answer could vary, but I've heard this rule of thumb generally everywhere.", "replies": [], "depth": 1}, {"id": "cnq61ec", "text": "4+ units\n\nAnything under that would fall into the duplex triplex category (residential). \n\nIt has to do with the depreciation tax schedule for properties. Commercial properties can get a tax rebate for depreciation up to 39 years and residential buildings have a lifespan of 27 years. That being said multi family commercial buildings have a shorter lifespan than the typical 39 year industrial building. \n\nedit: Okay, I don't think it has to do with the number of units (thought I remember reading that somewhere). Here's what my CCIM manual says:\n\nDetermine Property Type:\n\nThe property must be identified as either residential or non-residential (commercial). For cost-recovery purposes (depreciation), residential property is defined as property in which people live for 30 or more days at a time and where no substantial services are provided. An example of a substantial service is medical service provided by a healthcare facility, which by this definition is commercial.\n\nCommercial property is everything that is non-residential, such as office buildings, shopping centers, and warehouses, In mixed-use properties, if the income from any residential portion is less than 80 percent of the total income collected, the property is treated as commercial. \n\nClass life:\nResidential 27.5 years\nCommercial: 39 years ", "replies": [{"id": "cnq8uie", "text": "Is the lifespan from when the structure was built or from when you buy it. For example, if I buy a duplex built in the 50s will I get the 27 years of depreciation? What if it was recently renovated and in a like-new condition?", "replies": [{"id": "cnqab3i", "text": "When you bought it. It has nothing to do with actual age. I believe that any capital improvements (renovations) will get their own schedule, but it depends if it's a repair, improvement or betterment. I don't remember the details, but the IRS regs are pretty complex and have gone through some changes since I last dealt with them.", "replies": [], "depth": 3}], "depth": 2}, {"id": "cnqo9en", "text": "Why would you ever want a longer lifespan for a building?", "replies": [{"id": "cnqz8ki", "text": "So you can get a cost recovery tax break. The government is paying you because your building is losing value over time from use and deterioration of materials. ", "replies": [{"id": "cnqzkur", "text": "Yeah so wouldn't you want the lifespan to be as short as possible to accelerate that?  Is there some exception or special circumstance I'm missing here?", "replies": [{"id": "cnr0b2s", "text": "Yeah you would, assuming you were only planning to hold the asset for 10 years or so. But the IRS sets the rules. I'm assuming they did some research that led them to determine that a building under normal circumstances takes x amount of time to deteriorate. \n\nBetter to have a cost recovery rate over 39 years than to not get any discount for the deterioration of your building at all.  ", "replies": [{"id": "cnrj2bc", "text": "With a multi family residential building, you can elect either 27.5 or 39 year depreciation. In practice, it's almost always 27.5. ", "replies": [], "depth": 6}], "depth": 5}, {"id": "cns769c", "text": "There are ways of accelerating recapture schedules. Cost segregation in multifamily has huge upside if you know what you are doing", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cnq736u", "text": "Here is a Wiki link for \"[Commercial Property](http://en.wikipedia.org/wiki/Commercial_property)\" that explains what you are trying to find out. ", "replies": [{"id": "cnqd251", "text": "Thanks.  Wikipedia clearly says that multifamily buildings are included, though here is what confuses me:\n\n\"In many states, residential property containing more than a certain number of units qualifies as commercial property for borrowing and tax purposes\"\n\nIs it correct to say that what is \"commercial\" in some states may not be in others?\n\nThe reason I ask: I am starting a business that provides information about multifamily buildings (in relation to individuals considering living there, as well as investors considering buying the building).\n\nMy prior understanding was that the business would fall under the category of residential real estate.  But now I am not sure.  I think it is just a question of semantics, but still something I should be clear on.", "replies": [{"id": "cnqdohs", "text": "I agree with you that it seems to be just semantics. \n\nI think anything above 4 units is a Commercial building. It's use however is residential. \n\nAnd for tax purposes, depending on the state you are in, it is a commercial building.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cnq76db", "text": "Good answers from the rest but wanted to tack on financing changes after 4 units to generally commercial loans where under 5 you can typically get SFH lending products.  \n\nThere is a gray area for the smaller properties, or sets of buildings sold in portfolio, but generally residential agents are going to deal with &lt;5 and commercial at &gt;4 too.  \n\nIn states that differentiate commercial transactions from residential transactions in regards to licensing law (for reciprocity etc) where I've seen the line is always at 4+ too.  \n\nIts generally a pretty widely accepted number from what I've seen (though other issues can certainly affect if you'd consider it closer to residential or commercial for practical purposes).", "replies": [], "depth": 1}, {"id": "cnqj1ef", "text": "Technically, it's typically above four.  But I'd like to see you try to get a commercial broker to take a 6-10 unit complex...  So, as a functional definition from a brokerage perspective, I think the type of groups that are buying, selling, managing, and brokering the properties crosses over somewhere around 15-20 units. ", "replies": [], "depth": 1}, {"id": "cnv9p3c", "text": "It depends on the zoning. If it is a duplex zoned R-2 (residential example from my county) then it is residential even if you rent it out for income. If it is zoned commercially (ex: C-2), then most likely it wouldn't even allow for there to be duplexes there unless it was grandfathered in. But it would be commercial if it is zoned commercial. So to rap things up...depends on the zoning.\n", "replies": [], "depth": 1}]