Do you own or lease non-residential (think commercial) real property for your business or rent non-residential real property to others?
If so, interior improvements you make to the property may be fully deductible in a single year instead of over multiple years.
But to be deducted instantly, the improvements must fit into the category that the tax code calls “qualified improvement property” (QIP).
What Is QIP?
Ordinarily, non-residential real property is depreciated over 39 years. And so are improvements to such real property after it is placed in service. Note that we’re talking about real property improvements—changes to the building structure and building systems such as plumbing, electrical, and HVAC.
You depreciate personal property in a building, such as furniture, carpeting, and removable partitions, over seven years.
But Congress wants to encourage business owners to improve their properties. So, starting in 2018, the Tax Cuts and Jobs Act (TCJA) established a new category of depreciable real property: QIP, which has a much shorter recovery period than regular commercial property—15 years. But ... Log in to view full article.
