Tax incentive for retail store remodeling passes house, goes to senate


Retailers will likely be excited about the current progression of the "bonus depreciation" bill through the House of Representatives and into the Senate, as the provisions of the bill include financial incentives for remodeling stores' interiors and exteriors. The revised version of the potential law will include provisions for both owned and leased storefronts, according to the National Retail Federation. There is some pushback expected from the Senate and White House, according to Small Business Trends, although developments so far have been positive.

The Federation pointed out the major differences between remodeling under the accelerated depreciation rules and the costs of such a project when regular depreciation is in effect. Under the standard regulations, it takes 39 years to recoup the costs of retail remodeling through tax credits. However, the "bonus depreciation" bill under consideration will provide an immediate, 50 percent write-off to nearly all companies that want to update their retail storefronts. Under regular depreciation regulations, it would take 39 years to receive the full tax value. The chance to make visual and structural improvements at half the regular cost could easily spur many business owners to update their store space. As long as a project is cost effective, there are plenty of benefits to such an update. Keeping up with visual merchandising and store layout helps companies remain competitive with their local business rivals and better attract potential customers.

A wide array of options are available
If the broad based version of this bill is enacted into law, retailers will be able to write off 50 percent of the cost of many different capital investments to the interior and exterior of their places of business. Not only can new retail display fixtures, display tables and other major furnishings be purchased, the money saved can be reinvested for further improvements to a store's appearance and layout. Business owners who want to remodel but also want to wait until the "bonus depreciation" issue is decided in the federal legislature can consider this approach. Craft a basic remodeling plan that would be feasible even if the law doesn't pass, focusing on the most necessary improvements. A second, more costly option can then be created with the caveat that it would only be used if the bill is passed and signed into law by the White House.


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