Can I deduct nonresidential building improvement expenses? It depends on the type of improvement, but the Tax Cuts and Jobs Act of 2018 allows businesses to expense more types of nonresidential building improvements instead of depreciating them over several years. This change is due to the fact that building improvements now potentially qualify as section 179 property, and therefore would be eligible for immediate expensing once the property is placed in service. The law added the following improvements to be eligible for immediate expensing:
- Qualified improvement property meaning any improvement to a building’s interior.
- Roofs, HVAC, fire protection systems, alarm systems, and security systems.
When the IRS states “any” improvements to a building’s interior, there are exceptions. Improvements would not qualify if they were attributable to the enlargement of the building, any elevator/escalator, or the internal structural framework of the building. If the improvement costs fall under one or more of these definitions, the cost would need to be depreciated over many years.
What is section 179 property? What does “internal structural framework of the building” mean? Can I deduct my building improvements this year? When dealing with taxes, one question can lead to more but that is why we are here. Feel free to connect with us and see how we take the stress out of tax and accounting.