Below is a preview of one of the articles in the new KROST QUARTERLY Real Estate Issue, titled Updates to Qualified Improvement Property by guest author, Harry Sahi, Manager - Cost Segregation Services, KBKG.
With the 2017 tax year behind us, tax professionals are laser-focused on the various new rules presented by the recent Tax Cuts and Jobs Act (TCJA) effective for the 2018 tax year. One of the most significant changes related to real estate improvements is the new eligibility criteria for qualified improvement property (QIP). The new law eliminates depreciation categories for qualified leasehold improvements (QLI), qualified restaurant property (QRP), and qualified retail improvement property (QRIP). Only qualified improvement property (QIP) remains.
Qualified Improvement Property – Technical Error in the Law
Prior to the TCJA, Qualified Improvement Property was eligible for 50% bonus depreciation. The published committee reports indicate that Congress intended to provide both a 15-year recovery period and 100% bonus depreciation for QIP placed in service after 2017. The drafters of the actual legislation tied bonus eligibility to property with a recovery period of 20 years or less. However, in their haste to push the law through they failed to also specify the intended 15-year recovery for QIP. The result is that beginning with 2018, QIP retains its 39-year recovery period and...
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KROST Quarterly is a digital publication that highlights some of the hot topics in the accounting and finance industry. Volume 2, Issue 1 covers real estate trends and news including Opportunity Zones, Delaware Statutory Trusts, Cost Segregation, 1031 Exchange, Green Building Tax Incentives, and Qualified Improvement Property.