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ptax255
Level 6
August 30, 2022

UK Leashold extension fee - depreciation

  • August 30, 2022
  • 1 reply
  • 7 views

Hello, client owns UK rental property for which he paid a leasehold extension fee, to extend the lease from the government another 99 years. How should this payment be depreciated?

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1 reply

BobKamman
BobKamman
Level 15
August 30, 2022

Vacant land? Commercial?  Residential?  Depreciate it, as though it were a purchase.  There are still some of these 99-year leases in the US (I used to have a client with a percentage interest of one in DC).  

    P
    ptax255Author
    Level 6
    August 30, 2022

    Residential. Do I depreciate over 40 years as foreign property, or over 99 years?

    George4Tacks
    George4Tacks
    Level 15
    August 30, 2022

    I would use amortization for 99 years. IRC 178 for lease amortization. 

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