Last month the President signed into law H R 1 the Tax Cuts and Jobs Act TCJA a comprehensive tax reform law that will change the entire US tax landscape Key changes in the TCJA include a corporate flat tax rate of 21 a top bracket for individuals from 39 6 to 37 an increase in 179 expensing to 1 million a 5 year write off period for R D expenses a new 20 deduction for pass through entities one class of Qualified Improvement Property and 100 Bonus Depreciation 168 k for new AND used property Cost Segregation and the TCJA The biggest question our clients have asked is how will the TCJA change cost segregation In general non residential real property will continue to be depreciated over 39 years and residential rental property will also continue to be depreciated over 27 5 years Under the TCJA a real property trade or business must use the Alternative Depreciation System ADS if they choose to elect out of the limitation on interest deductions This would require a 40 year class life for nonresidential real property buildings 30 year class life for residential real property and 20 year class life for qualified improvement property If the taxpayer is required to use the ADS depreciation method 168 k Bonus Depreciation is not allowed however it is allowed for property that a taxpayer elects to depreciate using ADS As mentioned previously 168 k
