What is Qualified improvement property?
In short
Qualified improvement property is an improvement to the interior of a nonresidential building made after the building was first placed in service. It is depreciated over 15 years and qualifies for bonus depreciation and section 179 expensing.
Key takeaways
- Enlargements, elevators and escalators, and the building's internal structure are excluded.
- Without it, building improvements would be depreciated over 39 years.
- Cost segregation studies often identify it.
Where it's tested
TCP: Property Transactions: Advanced Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A taxpayer sells equipment with an adjusted basis of $60,000 (original cost $100,000, accumulated depreciation $40,000) for $120,000, receiving payments over four years. What is recognized in the year of sale beyond any installment gain on the first payment?