Income property brokers, heads up:  a 100% first-year depreciation deduction is available on qualified TIs. If you made improvements, or negotiated a nonresidential lease in 2011, forward this one on as a tax reminder!

Internal Revenue Code §168(k)(2)
Amended by Rev. Proc. 2011-26
Effective Date: March 29, 2011

Tenant improvements (TIs) constructed on nonresidential property after September 8, 2010 and before January 1, 2012 are eligible for a 100% first-year depreciation deduction.

To qualify for this 100% first-year depreciation deduction, the TIs must be constructed:

  • under a lease agreement;
  • on property used exclusively by the tenant; and
  • more than three years after the building was placed in service.

The following improvements do not qualify for the 100% first-year depreciation deduction:

  • building enlargements;
  • elevators or escalators;
  • structural improvements to common areas; and
  • the internal structural framework of a building.