ptax255
Level 7
08-30-2022
01:46 PM
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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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4 Comments 4
BobKamman
Level 15
08-30-2022
02:27 PM
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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).
ptax255
Level 7
08-30-2022
02:40 PM
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Residential. Do I depreciate over 40 years as foreign property, or over 99 years?
George4Tacks
Level 15
08-30-2022
03:34 PM
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I would use amortization for 99 years. IRC 178 for lease amortization.
Answers are easy. Questions are hard!
sjrcpa
Level 15
08-30-2022
05:31 PM
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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.
The more I know, the more I don't know.