"As a general rule, the cost of commercial real estate improvements is recovered over a painfully long period of 39 years via straight line depreciation only.
However, for specially defined categories of realty improvements, taxpayers may be entitled to the hat-trick of tax breaks: expensing under Section 179 of part of the cost of the improvements; bonus first-year depreciation deductions of the portion of the cost that isn't (or can't be) expensed; and a relatively short 15-year recovery period of the cost that isn't (or can't be) expensed or recovered via bonus first-year depreciation. Larger businesses may not qualify for expensing, but they still may be able to score bonus depreciation and a short 15-year recovery period.
For example, not all bonus-depreciation-eligible improvements will qualify for a 15-year writeoff of the remainder of the costs. And some expenses eligible for bonus first-year depreciation under the liberalized rules may not be eligible for expensing under Section 179 of the tax code.
The PATH Act substantially liberalized the expensing break for qualifying real estate improvements. It also made it easier for improvements to qualify for bonus first-year depreciation, but in the process it may have caused some complications."
Article source: Accountingtoday.com. April 26, 2016.
Author: Robert Trinz