New Qualified Improvement Property Classification

Property Taxes Salt Lake City UT

Property Taxes Salt Lake City UTOn Dec. 18, 2015, Congress passed a tax extenders package, the Protecting Americans from Tax Hikes (PATH) Act of 2015 and in that Act gave a new definition to non residential real property improvements falling in the category named Qualified Improvement Property. The definition of this property is as follows:

Qualified improvement property is any improvement to an interior portion of a building that is nonresidential real property if the improvement is placed in service after the date the building was first placed in service, excluding:

  1. ) enlargements;
  2. ) elevators/escalators; and
  3. ) internal structural framework. The improvements do not need to be made pursuant to a lease.

Qualified improvement property is depreciated over 39 years unless it also qualifies as qualified leasehold, restaurant or retail property. If falls into one of these classifications the improvements can be depreciated over 15 years. The real kicker in this is that all of these improvements are eligible for bonus depreciation.

Bonus depreciation for property placed in service thru December 31, 2017 is 50% of the cost.

In 2018 it is 40% and 2019 it is 30%. This is quite the expansion of the deduction for these types of costs and could provide significant tax savings in the year the improvements are completed. For a more in-depth explanation of qualified improvement property and a refresher on the definition of leasehold, restaurant or retail improvements, Give Us a Call and we would be happy to discuss it with you.

Areas of Service: Property Taxes Salt Lake City UT, Property Tax UT