Money spent to improve the property is depreciated. An improvement is anything that enhances the value or usefulness of a property, restores it to new or like-new condition, or adapts it to a new use.
The list of potential improvements is endless, but common improvements include:
- Building new additions or garages
- Installing new systems, such as heating or air conditioning
- Replacing the roof
- Adding wall-to-wall carpeting
- Installing accessibility upgrades, such as a wheelchair ramps
To qualify for bonus depreciation, the asset has to be used for business at least 50% of the time.
Real estate property that qualifies for bonus depreciation is as follows:
- Qualified improvements to commercial buildings placed in service after 2015 and before 2018
- MACRS property with a depreciation period of 20 years or less (including qualified improvement property placed in service after 2017)
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