What QIP is
Qualified Improvement Property is any improvement to the interior of a nonresidential building made after the building was first placed in service. The CARES Act fixed the so-called retail glitch, giving QIP a 15-year recovery period — which makes it eligible for bonus depreciation.
What does not count
QIP excludes three things: enlargements of the building, elevators and escalators, and the internal structural framework. Roofs, HVAC, and exterior work are also outside QIP, though some may qualify for Section 179 separately.
Why it matters for investors
Because QIP is 15-year property, it can be written off immediately with bonus depreciation instead of being depreciated over 39 years. On a commercial renovation, correctly classifying interior work as QIP can move a large deduction into year one — often identified through a cost segregation study.
Frequently asked questions
Is residential rental eligible for QIP?
No. QIP applies only to nonresidential (commercial) buildings. Residential interior improvements follow different rules.
Can QIP get bonus depreciation?
Yes. Because QIP is 15-year property, it qualifies for bonus depreciation at the rate in effect for the year placed in service.
How do I identify QIP?
A cost segregation study separates QIP and other short-life assets from the building shell so each is depreciated correctly.
Sources
- IRS Publication 946 — How to Depreciate Property
- IRS — Cost Segregation Audit Techniques Guide
- IRS Publication 527 — Residential Rental Property
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.