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Qualified Improvement Properties
Qualified Improvement Property (QIP) refers to any non-structural interior improvement to an existing building that is non-residential property.
What Qualifies as Qualified Improvement Property?
Qualified Improvement Property (QIP) refers to any non-structural interior improvement to an existing building that is non-residential property. QIP applies to leased spaces as well as self-owned property. Some examples of property that would qualify include: drywall, acoustical ceilings, interior doors, plumbing, fire protection, and electrical. Some examples of property that do not qualify include internal structural framework, elevators, escalators, and anything outside of the building.
We know Tax Savings Opportunities for 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.
A word of caution for current and future improvements.
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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