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Qualified Improvement Property (QIP) refers to any non-structural interior improvement to an existing building that is non-residential property.
Based on current tax law, it is more important than ever to properly identify and quantify property that is eligible for QIP treatment. As part of the CARES Act, new technical corrections allow for QIP to be depreciated over 15 years, thereby making it bonus eligible. This pertains to property placed in service in 2018 and after.
Large dollar amount lump sum improvements should not be automatically recorded as QIP with bonus depreciation. Time needs to be invested to review the financial and construction detail looking for items such as roofing, windows, exterior doors, façade work, and even HVAC. Many of these items, & more, will not be eligible for QIP and should remain in a 39 year depreciable category.
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