by William M. Bodnar, CPA, MST, Tax Director
As an incentive for capital spending, accelerated tax deductions are now available for “Qualified Improvement Property” (QIP). QIP includes improvements to the interior of any nonresidential property after the building was originally placed into service, but may not include those to enlarge a building, any escalator or elevator or the internal structural framework.
Bonus depreciation for 2016 and 2017 is 50% of the qualifying property cost. The rate decreases to 40% in 2018 and 30% in 2019. If you are planning to make QIP additions, completion before the end of 2017 will result in the greatest benefit. The QIP not subject to bonus is depreciated over a 39 year life. A shorter depreciation period is available for qualified leasehold improvements, retail or restaurant improvement property.
As a final reminder, taxpayers should also evaluate all expenditures under the current “repair regulations” to determine if the improvements may qualify as a deductible repair cost.
At H2R CPA, our cost segregation specialists can help identify all of the QIP cost involved in larger, more complex projects. For more information, contact H2R CPA at 412-391-2920 or firstname.lastname@example.org for a complimentary tax planning consultation.
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