Oops…the difference four little words can make

Short Version: The tax code is putting TI work at risk, unintentionally.

Long version:  Marketplace Morning report (listen here) is running a story about the four words left out of the tax reform act that are hurting businesses. This unintentional omission has resulted in extending the depreciation schedule for tenant improvements in retail from 15 years to 39.  The actual intent, we’re told, was to cut it completely and allow immediate depreciation for business owners.

Unfortunately, Congress has known about the problem since at least August of this year (https://www.rollcall.com/news/policy/senate-gop-seeks-tax-law-fixes-retail-glitch).  Speaker Paul Ryan promised to take up the problem in the current lame-duck session, but we didn’t see it on the House schedule for this week (https://www.majorityleader.gov/weekly-schedule/) and we don’t see any evidence that anything happened.

So it it looks as though retail TI work will be trending downward for quite a while.