Write off 30% up front

Depreciation can be friend or foe depending on context. The beneficial kind of depreciation—the type that helps building owners trim taxes—got a boost with recent legislation that allows commercial owners to deduct 30% of the cost of leasehold improvements in the year they’re installed. The remainder of the cost must still be depreciated over 39 years. The "bonus depreciation" allowance pertains to leasehold improvements made after Sept. 10, 2001, and prior to Sept. 11, 2004. A building owner, tenant, or subtenant may take the bonus as spelled out in a lease agreement. An excellent article on the subject appears in the Spring 2002 REALTORS® Commercial Alliance Report. If you do not receive this NAR newsletter for commercial practitioners, you can view it online at www.realtor.org/NCommSrc.nsf/files/RCAspring2002.pdf.

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