Some small business owners making building improvements may not have to wait years to deduct all of the costs. A special IRS safe harbor lets qualifying small businesses deduct certain improvement costs immediately instead of depreciating them over several years. To qualify, the business’s average annual gross receipts must be $10 million or less for the preceding three tax years, and the building’s unadjusted basis can’t exceed $1 million. Total annual spending on repairs, maintenance, improvements and similar work on a building must not exceed the lesser of $10,000 or 2% of the building’s unadjusted basis. Before starting a project, call us to see whether your business qualifies.
