APPLICABLE RECOVERY PERIOD FOR REAL PROPERTY.

SEC. 13204. APPLICABLE RECOVERY PERIOD FOR REAL PROPERTY.(a) Improvements to Real Property.—(1) Elimination of qualified leasehold improvement, qualified restaurant, and qualified retail improvement property.—Subsection (e) of section 168 is amended—(A) in subparagraph (E) of paragraph (3)—(i) by striking clauses (iv), (v), and (ix),(ii) in clause (vii), by inserting “and” at the end,(iii) in clause (viii), by striking “, and” and inserting a period, and(iv) by redesignating clauses (vi), (vii), and (viii), as so amended, as clauses (iv), (v), and (vi), respectively, and(B) by striking paragraphs (6), (7), and (8).131 STAT. 2110(2) Application of straight line method to qualified improvement property.—Paragraph (3) of section 168(b) is amended—(A) by striking subparagraphs (G), (H), and (I), and(B) by inserting after subparagraph (F) the following new subparagraph:“(G) Qualified improvement property described in subsection (e)(6).”.(3) Alternative depreciation system.—(A) Electing real property trade or business.—Subsection (g) of section 168 is amended—(i) in paragraph (1)—(I) in subparagraph (D), by striking “and” at the end,(II) in subparagraph (E), by inserting “and” at the end, and(III) by inserting after subparagraph (E) the following new subparagraph:“(F) any property described in paragraph (8),”, and(ii) by adding at the end the following new paragraph:“(8) Electing real property trade or business.—The property described in this paragraph shall consist of any nonresidential real property, residential rental property, and qualified improvement property held by an electing real property trade or business (as defined in 163(j)(7)(B)).”.(B) Qualified improvement property.—The table contained in subparagraph (B) of section 168(g)(3) is amended—(i) by inserting after the item relating to subparagraph (D)(ii) the following new item: “(D)(v) 20” , and(ii) by striking the item relating to subparagraph (E)(iv) and all that follows through the item relating to subparagraph (E)(ix) and inserting the following: “(E)(iv) 20 (E)(v) 30 (E)(vi) 35”. (C) Applicable recovery period for residential rental property.—The table contained in subparagraph (C) of section 168(g)(2) is amended by striking clauses (iii) and (iv) and inserting the following: “(iii) Residential rental property 30 years (iv) Nonresidential real property 40 years (v) Any railroad grading or tunnel bore or water utility property 50 years”. (4) Conforming amendments.—(A) Clause (i) of section 168(k)(2)(A) is amended—(i) in subclause (II), by inserting “or” after the comma,(ii) in subclause (III), by striking “or” at the end, and(iii) by striking subclause (IV).(B) Section 168 is amended—(i) in subsection (e), as amended by paragraph (1)(B), by adding at the end the following:“(6) Qualified improvement property.—131 STAT. 2111“(A) In general.—The term ‘qualified improvement property’ means any improvement to an interior portion of a building which is nonresidential real property if such improvement is placed in service after the date such building was first placed in service.“(B) Certain improvements not included.—Such term shall not include any improvement for which the expenditure is attributable to—“(i) the enlargement of the building,“(ii) any elevator or escalator, or“(iii) the internal structural framework of the building.”, and(ii) in subsection (k), by striking paragraph (3).(b) Effective Date.—(1) In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service after December 31, 2017.(2) Amendments related to electing real property trade or business.—The amendments made by subsection (a)(3)(A) shall apply to taxable years beginning after December 31, 2017.