TAX OWNERSHIP IS THE KEY. • If the TtTenant owns the itimprovements, the TtTenant will. likely have income. – Specifically, both the cash payment and the rent reduction. (if tied to improvements) are taxable for the Tenant. • If the Landlord owns the improvements, the Tenant. will not have income.
http://www.rina.com/files/8714/6367/7111/Construction_Allowances_and_Leasehold_Improvements_Maximizing_the_Tax_Benefits_PPTX.pdf
Tenant Improvements. The basic facts are as follows: a) Landlord has a long-time tenant whose lease. is coming due. b) As part of the renegotiation of the new lease, tenant has requested that landlord spend. $100,000 in new tenant improvements.
http://www.rina.com/files/8714/6367/7111/Construction_Allowances_and_Leasehold_Improvements_Maximizing_the_Tax_Benefits_PPTX.pdf
Leasehold Improvements. A leasehold improvement is an improvement made to a leased building by a department that has the right to use this leasehold improvement over the term of the lease. This improvement will revert to the lessor at the expiration of the lease. The Real Estate office is responsible for the leases entered into by the university.
http://www.finance.umich.edu/finops/accounting/construction/leaseholdimprovements
Leasehold improvements versus land improvements. Another misconception about the 15-year recovery period is that it is the same as that used for land improvements and therefore the same 150 percent declining balance to straight-line (150DB/STL) depreciation method applies.
http://rsmus.com/what-we-do/services/tax/lead-tax/confusion-over-qualified-leasehold-improvements-may-create-oppor.html
Leasehold improvements can generate tax deductions for a building owner as long as they are qualified improvements and meet Internal Revenue Service requirements. The IRS has four requirements that the improvement must meet to qualify and also has a list of excluded improvements.
http://finance.zacks.com/qualified-leasehold-improvements-3822.html
However, a series of extenders continued to make this provision available. The most recent, the Protecting Americans from Tax Hikes (PATH) Act of 2015, makes permanent the 15-year recovery period for qualified leasehold improvements (or QLHI) placed into service after Oct. 21, 2004.
http://rsmus.com/what-we-do/services/tax/lead-tax/confusion-over-qualified-leasehold-improvements-may-create-oppor.html
Energy efficiency improvements can allow the owner to take additional tax deductions, further decreasing her tax burden. Energy efficiency is a high-value improvement to any building, as it qualifies for tax credits and decreases the energy usage and costs over time.
http://finance.zacks.com/qualified-leasehold-improvements-3822.html
However, the definition of qualified improvement property is broader than the definition of qualified leasehold improvement property—so under the new rules, qualified leasehold improvement property is still eligible for bonus depreciation.
http://www.bakertilly.com/insights/bonus-depreciation/
Extension and modification of bonus depreciation rules and qualified improvement property provisions. On Dec. 18, 2015, Congress passed a tax extenders package, the Protecting Americans from Tax Hikes (PATH) Act of 2015, which modifies, extends, or makes permanent several depreciation-related provisions including:
http://www.bakertilly.com/insights/bonus-depreciation/
The provision makes permanent the 15-year recovery period for qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. View the summary of qualified improvement property rules and bonus depreciation for 2015 and 2016.
http://www.bakertilly.com/insights/bonus-depreciation/
what is the tax life of a leasehold improvement
The tax life of a leasehold improvement is 15 years. The tax life of a leasehold improvement is 15-year recovery period. The tax life of a leasehold takes 15 years recovery period to improvement.