Congress Still Working on Tax Extenders
Recently, the U.S. Congress released a broad tax extenders plan that would make 15-year depreciation on qualified leasehold improvements permanent. The complete package—estimated to cost roughly $650 billion over the next decade—also would include a two-year extension of the energy efficiency tax deduction for commercial buildings (also known as section 179D of the tax code), as well as some fixes to the Foreign Investment in Real Property Tax Act (FIRPTA). Successful passage of the plan would be a huge victory for both the commercial real estate industry and BOMA. Making the 15-year timeline for depreciating leasehold improvements permanent has long been BOMA International’s number one tax priority.
While this heavily negotiated package is expected to pass soon, if the deal falls through, the likeliest outcome will be a straight two-year extension of the 52 tax provisions known as “extenders,” which is a now yearly ritual of tax provisions being extended in the days before the congressional holiday recess. Late last year, Congress passed a one-year extenders bill, retroactive for tax year 2014. On January 1, 2015, the depreciation period reverted to 39 years. Congress also is expected to pass an omnibus spending bill funding the government for the next two years and then recess until after the holidays.