Qualified Improvement Property (QIP): What You Need to Know for Tax Savings

Renovating commercial property? Qualified Improvement Property (QIP) offers a valuable opportunity for tax savings through bonus depreciation. Let’s dive into what qualifies as QIP and how you can leverage this provision.

What is Qualified Improvement Property? QIP includes non-structural improvements to the interior of non-residential buildings made after the building was placed in service. Examples include:

• New lighting systems

• Interior drywall and flooring

• HVAC ductwork
  

What Doesn’t Qualify?

• Structural components like roofing and load-bearing walls

• Elevators or escalators

• Expansions of the building
  

In 2024, a retailer spends $1 million on a renovation project, including $250,000 on QIP (e.g., interior finishes, plumbing, and electrical systems). The retailer can apply bonus depreciation to deduct the full $250,000 immediately, reducing the financial impact of the project.

QIP and the CARES Act The CARES Act corrected prior errors, reclassifying QIP as 15-year property eligible for 100% bonus depreciation through 2022.

How Arc&Ledger Can Help We’ll help you identify QIP in your projects and ensure you claim all eligible tax benefits. Contact us today to start saving.