Certain enhancements made to an interior portion of nonresidential real property may be eligible for special tax treatment. These improvements must be to a building’s interior, and placed in service after the date the building was first placed in service. Specifically, it does not include enlargements to the building, elevators or escalators, or the internal structural framework.
This designation can lead to significant tax advantages through accelerated depreciation. Prior to certain tax law changes, these types of improvements were often depreciated over a longer period. The change allows businesses to recover costs associated with these interior improvements more rapidly, thereby reducing their current tax liability and potentially freeing up capital for further investment. This also encourages businesses to invest in updating and improving their physical locations.
