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Taking tax shortcut on building improvements

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in Small Business Tax

Q My business shares a warehouse with other tenants.  We have five years remaining on our lease, but the  building has 14 years left to be fully depreciated. If I  expand my part of the building, do I depreciate the cost  over 14 years instead of five? B.B., Cleveland 

A Neither. An improvement to business property is treated  as if the property was placed in service for the first time.  Therefore, you must depreciate the cost of the improvement  over 31.5 years. It doesn’t matter how long the term  of the lease is or how many years remain before the building  is fully depreciated. Tip: Certain components of business  buildings may be depreciated over a shorter time.  Check with your tax pro.

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