Article Date:
February 2024

Word Count:



The Added Tax When You Sell Qualified Improvement Property (QIP)

Do you own or are you thinking of owning an office building, a store, a warehouse, or a factory building?


Are you thinking of making improvements to the interior of this building?


If you make improvements to the interior that the tax law classifies as qualified improvement property (QIP), your commercial property now has three property components:



Land (non-depreciable)


Building (depreciated over 39 years using the straight-line method1)


QIP (depreciated over 15 years using the straight-line method, but alternatively eligible for Section 179 expensing2 and bonus depreciation3)


Technically, QIP means any improvement to an interior portion of a non-residential building (think offices, stores, factories, etc.) that is placed in service after the date the building is placed in service.4


The exceptions are costs attributable to the enlargement of the building, any elevator or escalator, or the building’s internal structural framework.5


Depreciation Is Not What It Used to Be


Before the Tax Reform Act of 1986 (notably, in 1981, when 15-year real property depreciation existed), you ... Log in to view full article.

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