qualified leasehold improvement property

qualified leasehold improvement property (QLIP)

An IRS term meaning any improvement made or to be made by a tenant-taxpayer to the interior part of nonresidential real property more than 3 years old,in space occupied exclusively by the tenant.For QLIPs placed in service after August 27,2005, and before January 1, 2009, in the GO-Zone (hurricane damaged states and counties), 50 percent of the cost of the QLIP may be taken as a depreciation deduction in the first year,rather than the 1/39 deduction allowed under normal tax law.

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For example, if a taxpayer builds out office space that is ready and available for use before January 1, 2015; however, the space isn't occupied until February of 2015, the leasehold improvements would still qualify for bonus depreciation, as well as qualified leasehold improvement property as noted below, if all the other requirements are met.
The act extends the exception allowing 15-year straightline cost recovery for certain qualified leasehold improvement property, qualified restaurant buildings and improvements, and qualified retail improvement property in the 15-year modified accelerated cost recovery system (MACRS) class placed into service prior to Jan.
167(f), or qualified leasehold improvement property.
Also, for the first time, the expensing provision applies to certain types of real property, including qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.
Types of property that qualify for this special depreciation include tangible property with a recovery period of 20 years or less, computer software purchased by the business, water utility property, and qualified leasehold improvement property.
Generally, qualified property is (1) MACRS property with a recovery period of 20 years or less, (2) water utility property, (3) computer software subject to depreciation under [section] 167, or (4) qualified leasehold improvement property.
Qualified leasehold improvement property is any improvement to an interior portion of a newspaper's building (provided certain requirements are met).
The 2010 Tax Relief Act fills this gap by extending through 2011 the section 168(e)(3)(E)(iv) rule treating qualified leasehold improvement property as 15-year property Thus, such property is once again eligible for bonus depreciation.
The Housing Act allows taxpayers to elect to accelerate AMT and research credits instead of taking bonus depreciation for new property that is (1) depreciable under a modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less, (2) MACRS water utility property, (3) off-the-shelf computer software depreciable over three years, or (4) qualified leasehold improvement property.
Qualified leasehold improvement property does not include any improvement related to the expansion of the building, to any elevator or escalator, to any structural component benefiting a common area, or to the internal structural framework of the building.
197 to which the MACRS rules apply, (3) water utility property to which the MACRS rules apply, (4) qualified leasehold improvement property to which the MACRS rules apply, (5) nonresidential real property or (6) residential rental property.

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