• Add the assets with the following details:
  • Property Type: R
  • Placed-in-Service date after: 10/22/2004
  • Depreciation Method: MF100
  • Estimated Life: 15 or 39 years

Note: Use MA100 for those Placed-in Service after 2008 Leasehold improvements and Qualified Improvement Property that also qualify for the 168 Allowance. Please See How to apply 168 allowance or How to perform Bulk Edit of Critical Depreciation Fields for further details in making the change and Sage City Blog post IRS Releases Qualified Improvement Property (QIP) Guidance for more information.

See also Community Hub Blog posts Breaking News: Qualified Improvement Property Now Has a 15-year Life! and How the CARES Act Changes QIP and Tax Returns for more information.

IRS Releases Qualified Improvement Property (QIP) Guidance.

Note: Previously, leasehold improvements or Qualified Improvement Property were required to be depreciated using the same depreciation method, life, and averaging convention as the underlying property to which they were attached. Generally, this meant most leaseholds were depreciated using MACRS straight-line depreciation with a mid-month averaging convention (MF100) over 39 years. With the American Jobs Creation Act of 2004, Congress is now requiring businesses to depreciate leasehold improvements using the straight-line depreciation method over a new 15-year life and applying either a Half-year or Mid-quarter averaging convention. This new mandatory requirement is in effect for property placed in service after October 22, 2004 and before January 1, 2018

Tax Cuts and Jobs Act of 2017 removed the 15 Year life for leaseholds improvements but the Coronavirus Aid, Relief, and Economic Security Act retroactively returns the 15 year life for all Qualified Improvement Property as of January 1, 2018 and later.