WASHINGTON — The House passed a broad tax relief bill Wednesday that would renew a provision that shortens the time it takes retailers to write off the cost of remodeling stores.
The overall legislation, which the House passed 241 to 181, would extend $31 billion in tax breaks for businesses and individuals and renews almost 50 current tax laws that are set to expire after Dec. 31. It is unclear whether the Senate will consider the bill this year due to the debate over health care, which has pushed many legislative issues aside.
Retailers are highly supportive of a provision in the House bill that provides for a one-year extension for certain leasehold improvements and sets a 15-year period for depreciation of remodeling retail stores that are owned or leased.
“In the current economic climate, some retailers look at remodeling as a way to revitalize a failing store, but the anticipated return has to pay for the costs involved,” said Steve Pfister, senior vice president for government relations at the National Retail Federation.
Without the extension, the depreciation period would revert to 39 years.
“Retailers improve stores every few years, so even 15 years [of depreciation] doesn’t match the economic life of a lot of [retail] improvements, but it is a significant improvement over matching the life of the building [39 years],” said Mark Warren, vice president for tax and finance at the Retail Industry Leaders Association.
“If the costs must be written off over 39 years, it would be much more difficult to make the decision to remodel the store,” Pfister said.
The provision would provide an estimated $5.4 billion in tax relief to retailers, restaurants and other businesses over 10 years, according to House Ways and Means Committee estimates.