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.