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.
Prior to the PATH Act, another category of bonus-eligible property had been "
qualified leasehold improvement property" (emphasis added).
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.
* For certain qualifying assets (MACRS property of 20 years or less or
qualified leasehold improvement property), an additional 50% first-year bonus depreciation is permitted.
Also, the Act reinstates for 2012 and extends through 2013 the ability to utilize expense method depreciation for up to $250,000 (as part of the overall limitation of $500,000) of qualified real property (
qualified leasehold improvement property, qualified restaurant property, and qualified retail 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. Original use of the property must have begun with the taxpayer after September 10, 2001.
Qualified leasehold improvement property does not include any improvement for which the expenditure is attributable to the enlargement of the building, any elevator or escalator, any structural component benefiting a common area or the internal structural framework of the building.
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.
