As part of the December 2017 Tax Cuts and Jobs Act, Congress created a framework to accelerate depreciation for businesses on qualified improvement property (QIP), which generally is any improvement made to the interior portion of a nonresidential building any time subsequent to a building being placed in service.
The depreciable life of QIP was to be reduced from 39 to 15 years and with 100% bonus depreciation being available for all assets with a life of 20 years or less. This would mean if you spent a million dollars in 2018 renovating interiors you should have been entitled to an immediate million dollar tax deduction.
Although that would have been great news, you know what happens -. In the final version, Congress forgot to specify QIP as 15 year life property. As a result, the life remained 39 years, and thus the property was not eligible for 100% bonus depreciation.
The 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act was the opportunity to repair things and provides a much-needed technical correction to the QIP problem, granting the intended 15 year life language while making the change retroactive to January 1, 2018. Thus, for anyone interested, you are entitled to file an amended return to reap the benefits of accelerated depreciation in 2018 and save when you file 2019.
The C&B team is dedicated to providing timely, accurate information on all aspects of the CARES Act and the current economic crisis that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at email@example.com or call 212 397 2970 with any questions you may have.