Leasehold Depreciation Provision Lapses – Payroll Tax Cut Extended

BOMA San Francisco Members:

Prior to leaving Washington in 2011, Congress approved a two–month payroll tax cut extension just eight days before its scheduled expiration. Typically, this 12.4 percent tax is split evenly between employees and employers. However, a bill President Obama signed into law in 2010 reduced the employees’ portion to 4.2 percent while employers continued to pay 6.2 percent in 2011. The payroll tax cut extension became the primary issue of concern in the remaining days and weeks of the first half of the 112th Congress. This meant less focus by lawmakers on the expiring package of tax "extenders," which includes the 15–year timeline for leasehold improvements. Consequently, building owners must return to depreciating leasehold improvements over a 39–year period. BOMA International will continue to raise awareness of the adverse economic impact this tax change will have and continue to advocate for extension of the 15–year provision in 2012 and beyond. BOMA will also continue to push for it to be considered on a permanent basis in the context of overall tax reform.