House Ways and Means Committee Chairman Kevin Brady (R-TX) is drafting a package of corrections to last year’s tax reform bill, the Tax Cuts and Jobs Act (TCJA). Republicans hope to include these changes in year-end legislation. However, there is pushback from their Democratic counterparts, creating doubt about whether something can be done this year.
The package would include a fix for the depreciation period for leasehold improvements. In the TCJA several separate categories of property improvements – leasehold, restaurant, and retail – were combined under a new definition called “qualified improvement property” (QIP). QIPs were intended to be depreciated over 15 years. Due to a drafting mistake, however, these improvements must be depreciated over 39 years.
This error affects shopping center owners and tenants who make updates to the components of their buildings – including internal partitions, lighting, plumbing, flooring and communication outlets – in order to meet the specific needs of their new and existing tenants and to comply with government regulations.
Fixing this error is a priority for ICSC. Please click here to send an email to your Members of Congress and ask them to fix QIP this year.
Phillips Hinch
Vice President, Tax Policy