2nd October 2019


Can you depreciate land improvements?

If these improvements have a useful life, they should be depreciated. If there is no way to estimate a useful life, then do not depreciate the cost of the improvements. If you are preparing land for its intended purpose, then include these costs in the cost of the land asset. They are not depreciated.

Also, can you take Section 179 on building improvements?

One of the major changes to Section 179 expensing is the ability to fully deduct qualified leasehold improvements. Qualified leasehold improvements can be expensed up to $250,000 for tax years beginning in 2010 and 2011. Section 179 historically was only applicable to tangible personal property not real property.

Is there depreciation on leasehold improvements?

Technically, leasehold improvements are amortized, rather than being depreciated. This is because the actual ownership of the improvements is by the lessor, not the lessee. The lessee only has an intangible right to use the asset during the lease term. Intangible rights are amortized, not depreciated.
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