Improvements made to the interior portion of a nonresidential buildingexcluding those to elevators, escalators, or structural componentsare generally categorized as a specific type of asset for tax depreciation purposes. For example, renovations like new flooring, interior walls, or HVAC upgrades in an office building would fall under this categorization. Such assets are distinct from other building improvements due to specific rules governing their depreciation.
This asset class is significant because it allows businesses to recover costs through depreciation deductions, potentially impacting tax liability and cash flow. Historically, the classification and depreciation rules for these assets have undergone changes due to tax law revisions, influencing how businesses account for these expenditures. Understanding these rules can lead to substantial tax savings and better financial planning.
