Typical deductions and depreciable life
according to Sec.
And land improvements--such as parking lots, sidewalks, fences and outdoor lighting--enjoy a 15-year depreciable life
The business may be able to recover the cost more or less quickly as a capitalized repair cost than as a startup cost depending on the depreciable life
of the asset for which the business capitalizes the cost.
The increase in tax expense by depreciating the cost of a land improvement over a shorter life than the cost of real estate will work to decrease the taxpayer's taxable income in the early years of the land improvement's depreciable life
. It will also defer the taxpayer's tax liability until a later year (or years) and, using the principles of time value of money, may ultimately result in significant tax savings.
In addition, the act extends a 50 percent bonus depreciation provision for qualified property through the end of 2013 and decouples bonus depreciation from the Internal Revenue Code Section 460 percentage of completion method of accounting for assets with a depreciable life
of seven years or less that are placed in service in 2013.
The standard depreciable life
for commercial buildings is 39 years.
IREM strongly supports efforts to more accurately measure the depreciable life
of buildings and to conform amortization periods of tenant improvements more closely to the term of the lease.
The Tax Reform Act of 1986 increased the depreciable life
of real estate to 31.9 years for nonresidential property and 27.5 years for residential property.
If so, the economic useful life of the unit of property is the depreciable life
reflected on the applicable financial statement, unless the taxpayer can show by "clear and convincing evidence" that a shorter useful life is appropriate.
IRS codes require a 39-year depreciable life
The innovations are expected to save more than 4 million gallons of water, 24 million cubic feet of natural gas and $1 million in operating costs over the 30-year depreciable life
of the building.