Legislation introduced last week would expand and make permanent a 2004 tax provision that temporarily shortens the depreciation period for retail remodeling and other improvements made to stores.
Ways and Means Committee member and the chairman of the Subcommittee on Select Revenue Measures, Rep. Richard Neal, D-MA, along with cosponsors Rep. Phil English, R-PA, Rep. Artur Davis, D-AL, Rep. Sam Johnson, R-TX, and Rep. Jim Ramstad, R-MN, on June 28 introduced Bill H.R. 2936. The bill would permanently reduce the depreciation period for improvements to stores to 15 years from the current 39 years and would apply to both leased and owned stores.
Right now, improvements retailers make to leased stores can be depreciated over 15 years, but improvements made to stores that are owned must be depreciated over 39 years. The bill would make permanent the 15-year depreciation period for leased stores, which is set to expire Dec. 31. It would expand the improvements to owned stores so that the depreciation timeframe would be 15 years for both.
The National Retail Federation has called on the House for support of the legislation. “Retailers must update their stores every five to seven years in order to compete,” NRF vice president/tax counsel Rachelle Bernstein said in a statement. “The Neal bill gives us a depreciation period that is more realistic and treats all retailers the same without discrimination.”