February 20, 2013
Peter Buell, Tax & Business Services Partner, Quoted in Long Island Business News Article "Don't Wait to Update Office Space, Equipment"
By Bernadette Starzee
If you're thinking of making improvements to your office space, restaurant or store, this is the year to do it – again.
The recent fiscal cliff deal extended the 15-year depreciation rule for qualified improvements through the end of 2013 and added retroactive benefits for improvements made in 2012. The rule had expired at the end of 2011.
Typically these improvements would have to be depreciated over 39 years.
Accountants say it's a bit like deja vu all over again.
"Toward the end of 2011, when the 15-year rule was expiring, clients that were planning to make improvements accelerated the work so they would get it done by the end of the year," said Peter Buell, a partner who focuses on real estate for Marcum, an accounting firm with offices in Melville. "If there's no clarity for 2014, we can expect to see more activity toward the end of this year."
But tenants that are looking to upgrade their space might be incentivized to move on it before the tax break goes away, Buell said.
"Typically, when tenants move to another space within the building, the landlord will gut it and build to the tenant's specifications," he said.
Of the landlord and tenant, whoever pays for the build-out and "owns" the improvements gets the tax break.
Given that the purpose of the 15-year rule is to give companies an incentive to spend money now, Buell is baffled by one piece of it.
"What makes no sense to me is, why go retroactive to 2012?" he said.
Click here to read the full article on www.LIBN.com >>