Qualified Improvement Property
Qualified improvement property is 15-year straight-line property: an interior improvement made by the taxpayer to a nonresidential building after the building was first placed in service. Enlargements, elevators, escalators, and internal structural framework are excluded. Educational information, not tax advice.
Educational information, not tax advice.
Updated 2026-10-14
Key takeaways
- §168(e)(6): QIP is an improvement made by the taxpayer to an interior portion of nonresidential real property, placed in service after the building was first placed in service.
- Excluded: enlargement of the building, any elevator or escalator, and the internal structural framework.
- QIP is 15-year property using straight line (20-year ADS) and is generally bonus-eligible.
- The CARES Act made that 15-year treatment effective for QIP placed in service after December 31, 2017.
- QIP does not apply to residential rental buildings or to exterior work such as roofs.
Section 168(e)(6) defines qualified improvement property as any improvement made by the taxpayer to an interior portion of a building which is nonresidential real property if the improvement is placed in service after the date the building was first placed in service. Subparagraph (B) states that the term shall not include any improvement for which the expenditure is attributable to the enlargement of the building, any elevator or escalator, or the internal structural framework of the building.
Section 168(e)(3)(E)(vii) classifies QIP as 15-year property. Section 168(b)(3)(G) requires the straight-line method. The ADS class life for QIP is 20 years under the special table in §168(g)(3)(B). As property with a recovery period of 20 years or less, QIP is generally eligible for bonus depreciation if no other exclusion applies — including the ADS-required exclusion for an electing real property trade or business.
The CARES Act (Public Law 116-136), enacted March 27, 2020, made QIP 15-year property effective as if included in the 2017 law — so for QIP placed in service after December 31, 2017. It also added the “made by the taxpayer” requirement. Taxpayers who depreciated post-2017 QIP as 39-year property can generally change to 15-year treatment. Rev. Proc. 2020-25 provided procedures, and DCN 244 in Rev. Proc. 2025-23 covers the automatic change.
QIP is not a second name for every interior finish. Personal property that meets Treas. Reg. §1.48-1 can still be 5-year or 7-year property. Structural components that are not QIP remain with the 39-year building. The QIP category sits between those two results for qualifying interior real-property improvements.
This page is educational information, not tax advice. Whether a particular build-out is QIP depends on who made it, when the building was first placed in service, and whether an exclusion applies. That is a CPA determination.
What QIP is not
QIP does not apply to residential rental buildings. An apartment interior renovation is not QIP. It may still include personal property and, separately, capital-improvement questions under Treas. Reg. §1.263(a)-3.
Exterior work such as roofs or façades is not an interior improvement. Some roof, HVAC, fire protection, and security improvements may instead be eligible for §179 as qualified real property if they are placed in service after the nonresidential building was first placed in service. That is a §179 election, not QIP.
Improvements placed in service at the same time the building is first placed in service are not QIP. Original construction interiors stay with the building unless they are personal property under the usual tests.
The three statutory exclusions
Enlargement of the building is excluded. Adding square footage is not QIP even if the new space is interior to the addition. The statute keys the exclusion to an expenditure attributable to the enlargement.
Any elevator or escalator is excluded. Elevators and escalators are also listed as structural components in Treas. Reg. §1.48-1(e)(2). They do not become 15-year QIP by being installed after the building opened.
Internal structural framework is excluded. That phrase is in the statute. This page does not expand it beyond the statutory words. Close questions about what counts as internal structural framework belong with the taxpayer’s CPA.
Fixing prior returns
Taxpayers who depreciated QIP placed in service after 2017 as 39-year property can generally change to 15-year treatment. Rev. Proc. 2020-25 provided the original procedures after the CARES Act technical correction.
DCN 244 in Rev. Proc. 2025-23 covers the automatic change for QIP placed in service after December 31, 2017. Eligibility conditions are in that revenue procedure, not fully restated here. Filing is a CPA decision. Form 3115 instructions are dated December 2022.
Bonus depreciation on that QIP follows the original acquisition and placed-in-service dates. A 2019 interior project does not receive the 100 percent rate available, as of October 16, 2026, to property acquired after January 19, 2025.
Historical categories
Qualified leasehold improvement, qualified restaurant, and qualified retail improvement property were separate 15-year categories under earlier law for property placed in service before 2018. Older guides that focus on those categories describe the prior law.
QIP replaced that patchwork for later years, with the CARES Act correction making the 15-year period retroactive to post-2017 placements. Do not apply the old qualified-leasehold tests as if they were current QIP.
ADS, bonus elections, and §179 elections can still change the outcome for current QIP. The 15-year GDS period is the default classification, not a guarantee of any particular first-year deduction.
Sources
- 1
- 2
- 3
- 4IRS Publication 946 — How To Depreciate Property (2025)(opens in a new tab)
Appendix B reproduces the Rev. Proc. 87-56 class lives.