Manufacturing Buildings That Qualify for QPP

Manufacturing buildings that qualify for QPP include a broad range of production facilities where tangible goods are fabricated, assembled, processed, or produced. The common thread is that the building must be integral to the manufacturing process, not merely a structure that happens to house manufacturing equipment or be owned by a manufacturing company.

QPP qualified manufacturing facilities span industries including automotive, electronics, food processing, pharmaceuticals, textiles, metals, chemicals, plastics, and consumer goods. The facility type matters less than whether the building meets the functional tests for production use, structural integration, and compliance with IRS guidance.

For background on QPP eligibility requirements and how they apply across property types, refer to the Qualified Production Property overview. This article focuses on specific manufacturing building types and how they qualify under the QPP framework.

Production facilities that qualify for QPP share common characteristics. They are designed or modified to support manufacturing operations, contain specialized building systems for production environments, have layouts optimized for manufacturing workflow, and house the equipment and processes that transform raw materials into finished goods.

Eligible production property examples demonstrate structural integration through features like reinforced floors for heavy equipment, high bay ceilings for production machinery, specialized HVAC for manufacturing environments, heavy electrical service for industrial equipment, and layouts designed around production flow rather than generic commercial use.

Common Production Facility Features

• Structural Systems: Reinforced foundations and floors, specialized load-bearing capacity, crane systems, heavy-duty construction.
• Building Systems: Industrial HVAC, heavy electrical service, process-specific utilities, specialized ventilation or environmental controls.
• Layout Design: Floor plans optimized for production workflow, equipment placement, material flow, and manufacturing process requirements.
• Production-Specific Elements: Cleanrooms, explosion-proof construction, temperature-controlled environments, specialized safety systems.

Food processing plants are common QPP-eligible facilities. These buildings are used to process raw agricultural products into finished food items through cutting, cooking, mixing, packaging, and other production processes. The buildings typically require specialized features including food-grade construction materials, sanitation systems, temperature control, and layouts designed for food safety compliance.

Qualifying food processing operations include meat processing, dairy production, beverage manufacturing, baked goods production, canning and packaging facilities, and prepared food manufacturing. The production areas of these facilities qualify for QPP, while warehousing, administrative offices, and distribution areas are separately depreciated unless they meet the production use percentage test.

Assembly and fabrication facilities qualify for QPP when they are used to assemble components into finished products or fabricate parts through manufacturing processes. Automotive assembly plants, electronics manufacturing, machinery fabrication, and similar operations meet the production activity definition if the building is structurally integrated with the assembly process.

Industrial buildings QPP eligibility for assembly operations depends on whether the building is purpose-built or modified for the assembly process. Assembly plants with specialized conveyance systems, production line infrastructure, equipment integration features, and layouts designed for assembly workflow demonstrate the required structural integration.

Pure distribution centers or warehouses where products are sorted, stored, and shipped without manufacturing or assembly do not qualify. The distinction is whether value is added through production processes or whether the facility merely handles finished goods.

Factory property tax incentives through QPP apply to traditional industrial buildings and factories where raw materials are transformed into finished products. Metal fabrication shops, chemical production plants, textile mills, plastics manufacturing, and similar facilities qualify if they meet the production use and structural integration requirements.

These facilities typically feature heavy-duty construction, specialized industrial systems, production- specific layouts, and building designs that accommodate manufacturing equipment and processes. The structural elements that demonstrate integration include reinforced structural supports, industrial utilities, specialized ventilation or environmental systems, and production-optimized floor plans.

Industrial parks or multi-tenant industrial buildings require careful analysis. Each tenant's space must be evaluated independently based on use. A building with multiple manufacturing tenants may have some spaces that qualify and others that do not, depending on the actual use of each area.

Extraction facilities used for mining, drilling, or natural resource recovery can qualify for QPP if the building is integral to the extraction process. Similarly, utility production facilities used for electricity generation or qualifying natural gas production meet the production activity test.

These facilities must be more than generic structures housing equipment. The building itself should be designed or modified to support the extraction or utility production process. Power generation plants, natural gas processing facilities, and extraction operation buildings with production-specific design features can qualify.

Many manufacturing campuses include buildings with both production and non-production areas. These mixed-use facilities require allocation between qualifying and non-qualifying portions. If the production area meets the production use percentage threshold, that portion can qualify for QPP while the remaining area is depreciated over 39 years.

The allocation must be supported by floor plans, use descriptions, and engineering analysis demonstrating which areas are integral to production and which serve administrative, warehousing, or support functions. Integrated support areas that directly facilitate production may be included in the QPP percentage calculation, while generic office and storage spaces are excluded.

For guidance on how QPP applies to new construction versus existing buildings, see QPP for Existing Buildings vs New Construction. For broader context on depreciation strategies, refer to the cost segregation overview.