Qualified Improvement Property (QIP)

Improving Tax Policy

Through Section 2307 of the 2020 CARES Act, IFA helped secure immediate depreciation on the costs of eligible remodels, renovations, and improvements for franchise businesses. This commonsense fix to a technical glitch in the 2017 Tax Cuts and Jobs Act is improving the bottom lines of thousands of franchise businesses throughout the United States.


Previously, under current law, the depreciation period (the period during which a certain cost for a business is allocated) for QIP was mistakenly raised to 39 years, an extension that poses a significant economic burden on franchise small business owners. This 39-year depreciation did not reflect the reality that to remain competitive and attract customers, these businesses must renovate and improve their structures far more frequently than every four decades.

IFA's advocacy focused on QIP's impact on a wide array of common business improvements, not just major renovations. General work like installing tile floors, new lighting systems, sprinkler systems, and other interior improvements also fall within the category of QIP. Such a high depreciation period meant any remodels, renovations or just general up-keep increasingly can become cost-prohibitive to franchise small business owners already facing a heavy tax burden. 

By allowing for immediate depreciation on the costs of eligible remodels, renovations, and improvements, the new provision will improve the bottom-lines of thousands of franchise businesses throughout the United States.