3.7 Property Standards
General Principles for Property Acquisition and Management
Property includes both real property and personal property. Real property typically includes things like land and buildings. Personal property includes both tangible personal property, which is classified as either equipment or supplies; and intangible personal property, which includes things having no physical existence, like trademarks, copyrights, and patents. See definitions in 2 C.F.R. § 200.1. Each of these is addressed in further detail below.
DOJ expects recipients and subrecipients of Federal funds to use good judgment when purchasing, managing, and disposing of property paid for by Federal funds. If a recipient or subrecipient uses award funds to purchase new property when suitable property is already available within the relevant organization, this use will be considered an unnecessary expenditure.
Financial Management Tip
Organizations may use their own capitalization policy for classification of equipment and supplies, but only where it is less than the Federal policy threshold of $5,000.
Equipment means tangible personal property (including information technology systems) having 1) a useful life of more than one year and 2) a per-unit acquisition cost of $5,000 or greater (or the organization’s capitalization policy, if it is less than $5,000). If the organization does not have a capitalization policy in place, the Federal policy amount of $5,000 must be followed.
Supplies are all other items of tangible personal property that are not equipment. This includes computing devices that cost less than $5,000 per unit (or the organization’s capitalization threshold, if that is less than $5,000).