Title: Building improvements now eligible for bonus depreciation | Williams-Keepers LLC
Headings: Building improvements now eligible for bonus depreciation
Building improvements now eligible for bonus depreciation
“Qualified improvement property” definition
Qualification Changes
How this change will affect business owners
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Posted By Katie Barthel, CPA on 7-29-2016                | Topics: Articles,

Content: In 2016 and 2017, 50% bonus depreciation is available to be used on all “eligible property,” according to Internal Revenue Code Section 168 (k). This allowance is reduced to 40% in 2018 and 30% in 2019, and it will not be available in the calendar year 2020 and beyond. Property eligible for bonus depreciation has historically been limited to machinery, equipment, and software. However, with the passage of the PATH Act and beginning after December 31, 2015, the definition of property that is eligible for bonus depreciation is expanded to include “qualified improvement property.” “Qualified improvement property” definition
“Qualified improvement property” is any improvement that has been made to the interior portion of a nonresidential building after the building was originally placed in service. Improvements that are not included in this definition are building additions, an elevator or escalator, or internal structural framework for the building. Fortunately, qualified improvement property comprises most other improvements, including the following: Internal cooling/heating items
Lighting and other electrical
Plumbing
Ventilation
Energy management systems
Permanent floor coverings
Fire protection and alarm systems
Woodwork
Exit signs
Restroom partitions
Building security systems
Permanent but not load-bearing walls
Doors
Ceilings not needed for building stability
Structural components that benefit a common area
Qualification Changes
In 2015 and prior years, building improvements were not eligible for bonus depreciation unless they qualified as one of the following types of property: qualified leasehold improvement property; qualified restaurant property;