Posts Tagged ‘leasehold improvements’

Tax Extenders Bill

Posted on: December 26th, 2014 by

CPA RockvilleOn December 19, 2014, President Obama signed into law The Tax Increase Prevention Act of 2014 (HR5771), which which temporarily extends over 50 expired incentives for individuals, businesses and energy through 2014.  The law also creates Achieving a Better Life Experience (ABLE) accounts set up for the benefit of persons with disabilities.  Extenders included in the legislation are the state and local sales tax deduction, IRA distributions to charity, and the above-the-line deduction for higher education.

Key provisions in the bill particularly impacting construction and real estate businesses include the extension of 50% bonus depreciation and qualified leasehold improvements for the 2014 tax year.  Under HR 5771, qualified leasehold improvement property will continue to be eligible for 50% bonus depreciation.  This property is defined in IRC 168(k)(3) as new improvements to an interior portion of a building that qualifies as nonresidential real property.  In addition, this treatment is available as long as the improvements are made by the lessor more than three years after the date the building was placed in service.

Notable exceptions to qualified leasehold improvement treatment include: elevators, escalators, structural components benefiting a common area, or the internal structural framework of the building.  For more information or to take advantage of the new legislation, please contact Eric L. Bach & Associates for a free consultation.