Much has been written about Qualified Improvement Property (QIP) lately. QIP is defined as any improvement to an interior portion of a building that is nonresidential real property if such improvement is placed in service after the date such building was first placed in service. QIP does not include any improvement for which the expenditure is attributable to the enlargement of the building, any elevator or escalator, or the internal structural framework of the building.
QIP was left off the list of 15-year depreciation period property and is thus ineligible for TCJA’s 100% bonus depreciation. Many commentators opined that this was a mistake, a drafting glitch of sorts, and would be soon remedied. Well, the government released proposed bonus depreciation regs (104397-18) on August 3, 2018. QIP still only qualifies for bonus depreciation if acquired and placed in service between September 27, 2017 and December 31, 2017. This first set of proposed regs leaves 2018 forward QIP ineligible for bonus depreciation – a significant issue for companies with real estate holdings since nonresidential interior renovations generally qualify as QIP.
Perhaps a future technical correction will enable QIP to qualify for the 100% depreciation. Surgent will certainly let you know. Make sure you subscribe to our e-mails to get the latest information.
Nick Spoltore is VP of Tax & Advisory Content for Surgent CPE. Mr. Spoltore is a graduate of the University of Notre Dame and of Delaware Law School. Before joining Surgent, he practiced tax and business law at the firm of Heaney, Kilcoyne in Pennsylvania and also in Delaware.