The election to expense the cost of property acquired in 2018 under Code Sec 179 has been expanded.  The limit is now $1,000,000 and the phase-out threshold was increased to $2,500,000.

The definition of 179 property was expanded to include the following improvements to nonresidential real property after the date the property was placed in service:

  • Qualified improvement property, which means any improvement to a building’s interior, except improvements attributable to the enlargement of the building, any elevator or escalator, or the internal structural framework of the building.
  • Roof, HVAC, fire protection systems, alarm systems and security systems.

For 2018 the alternative depreciation system (ADS) recovery period for residential rental property was shortened from 40 years to 30 years.  This can apply to entities electing out of the interest deduction limitation under Code Sec 163(j) where they have to use ADS to depreciate any of their nonresidential real property, residential rental property, and qualified improvement property.

Qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property are no longer separately defined and given a special 15-year recovery period.

For more information or questions, please contact Tax Director, Rob Keasal.

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