Washington, D.C. -- The House has passed legislation broadening a federal tax law that makes it cheaper for retailers to remodel their stores, the National Retail Federation said.
Lawmakers voted 258-160 today to make “bonus depreciation” permanent, and granted NRF’s request that it be expanded to include stores that are owned rather than just those that are leased. The measure now heads to the Senate.
Bonus depreciation lets retailers write off half the cost of a remodeling project or other improvements immediately, saving them a significant amount of money that can sometimes make the difference in whether a project is financially feasible. Without it, the full amount would have to be depreciated over 39 years (although a law reducing it to 15 years that expired at the end of 2013 is expected to be renewed).
“The depreciable life for improvements to retail stores is too long” even at 15 years,” wrote NRF senior VP for government relations David in a letter to the House, noting that most retailers update their stores every five to seven years. “Bonus depreciation provides a very important incentive for making these investments on the more rapid timetable needed to address competition in the marketplace.”
Expanding the law to include owned stores is important because it is unfair to restrict its benefits to leased stores, French said. About half of stores are owned, many of them by small retailers who find it difficult to afford leased space in malls or who chose to buy their buildings as a retirement investment, he said.
Bonus depreciation also applies to other capital investments made by both retailers and other industries. It was first passed as an economic stimulus measure after the September 11, 2001, terrorist attacks and has been renewed off and on since then with a number of variations.