On February 13, President Bush signed into law the Economic Stimulus Act. While most of the attention is focused on the dispersal of rebate checks to taxpayers, there are also a couple of significant tax-saving provisions geared toward landlords, developers, business owners, and tenants.
Our overview will be on the provision called bonus depreciation.
Bonus depreciation was first introduced following September 11, 2001, but the policy expired at the end of 2004. It was reintroduced with the Economic Stimulus Act of 2008 to both encourage new construction and the purchase of depreciable assets.
For landlords, developers, business owners, and tenants the provision allows for a 50 percent write-off of qualified leasehold improvements in 2008. This is a drastic change from the 2.5 percent per year allowed since 2006.
The idea is to encourage improvement to existing non-residential properties that are more than three years old. For example, renovation of a Class B office building into a more-sought-after Class A building to meet the requirements of a prospective tenant. (Continued on PDF)