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?
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).
Residential. Do I depreciate over 40 years as foreign property, or over 99 years?
I would use amortization for 99 years. IRC 178 for lease amortization.
I think Bob is correct.
Somewhere in my memory of Accounting 101 a 99 year lease = ownership.
So it would be 40 years, if it is depreciable at all.
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