New Report on Qualified Improvement Property Error 

The drafting error in the U.S. Tax Cuts & Jobs Act that moved leasehold improvement property—as well as restaurant and retail property—from a 15-year depreciation schedule to a 39-year one is getting some much-deserved attention. All three property types were combined into “qualified improvement property” (QIP) in the 2017 tax bill and were supposed to be granted both a 15-year depreciation period and full expensing until 2022.

However, the writers of the bill neglected to specify a depreciation period, reverting all property back to 39 years. BOMA International has been working with a coalition of other real estate groups to pass a technical correction to resolve the issue. Last week, the Tax Foundation, a bipartisan organization, released a report on what they have coined the “Fixtures Fix.” The report outlines the ramifications of the error, including its potential to negatively affect local economies, and urges Congress to correct the issue without delay.

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