But perhaps most important to many property management businesses is the inclusion of
qualified leasehold improvement property as part of the qualified property.
168(e)(3)(E)(iv), (v), and (ix) carve out three exceptions to this rule:
qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.
Under pre-PATH Act law,
qualified leasehold improvement property had to be placed in service at least three years after the building itself was placed in service.
The bill passed Tuesday increases the maximum amount and phase-out threshold in 2015 and 2016 to the levels in effect in 2010 through 2014 ($500,000 and $2 million respectively), and also extends the definition of Section 179 property to include computer software and $250,000 of the cost of
qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property for two years.
Since
qualified leasehold improvement property was reinstated for 2012, it is eligible for 50% bonus depreciation if placed in service in 2012 or 2013 under the special rule that applies to it under the bonus provision.
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).
Qualified real property, for these purposes, means
qualified leasehold improvement property as defined in Sec.
Once these guidelines are met, the improvements are then eligible to be treated as 15-year recovery
qualified leasehold improvement property eligible for special depreciation, which includes 50% bonus depreciation for tax year 2016.
Qualified leasehold improvement property defined in IRC section 168(k)(3) (basically, improvement to an interior portion of a leased building that is nonresidential real property).
