Welcome Guest. Register Now!  


For 2013 Tax Tips For Year 2013.


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-14-2014, 07:10 PM
Junior Member
 
Join Date: Jan 2014
Posts: 2
Leasheold improvments and business personal property tax

Hi,
I have a business in Maryland and we spent a significant amount of money to remodel our space before we could use it. When I filed federal taxes for 2011 I deducted our leasehold improvements as an asset. For personal property tax, I read that leasehold improvements applies when "the lessee retians ownership of the leasehold improvements, or is required to remove them at the end of the lease". According to this, then leasehold improvements would not be taxable in my situation. So my question is, is it possible that under Federal taxes I deduct my leasehold improvements as an asset but for personal property tax they are not taxable? Thanks for the reply



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-15-2014, 01:55 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by ChrisNZ View Post
So my question is, is it possible that under Federal taxes I deduct my leasehold improvements as an asset but for personal property tax they are not taxable? Thanks for the reply

Leasehold improvements are assets, and they may be depreciated. Prior to 2004, any substantial improvements were depreciated over 39 years. Thirty-nine years is the IRS-designated useful life of a building being leased. The useful life of leasehold improvements is 5 to 10 years. This is also the average commercial-lease term .In 2004, legislation was introduced to reduce the period of depreciation of improvements from 39 years to 15. This allowed landlords to modernize their buildings every 15 years instead of every 39, and to write off 2 1/2 times the rate of depreciation.so, qualified leasehold improvement property , generally nonresidential interior improvements made pursuant to a lease , is eligible for special tax treatment that allows the taxpayer to deduct 50 percent of the cost of the improvements in the year the property is placed in service. The remainder of the property's cost can be amortized over a 15-year period. If the cost of the leasehold improvements was financed according to a loan, you also must include the interest paid under that loan as part of the capitalized basis. Leasehold improvements generally revert to the ownership of the landlord upon termination of the lease, unless the tenant can remove them without damaging the leased property. However, if not, nothing that was installed over the term of the lease can be considered permanent, since it will have to be removed if the tenant moves. This fact means that the work performed cannot qualify as a capital improvement. In some states, the personal property tax only applies to businesses. In those states, the personal property is anything that can be removed from the business without damage to it. For example, you can't remove the walls of the business, so those aren't taxed under personal property. But you could take out the office furniture, which is something that many states do tax.you can check it with your state.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 01-15-2014, 04:24 PM
Junior Member
 
Join Date: Jan 2014
Posts: 2
Thank you for your reply!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Depreciation of Personal Property after rental use skibo84 Depreciation 1 08-11-2012 04:39 AM
Can Suspended Losses from Rental Property converted to Personal Residence be released upon sale of another rental property? mountainaire Rental Real-Estate 1 04-05-2011 03:59 AM
Sale of Rental property formerly used as personal residence Kato Rental Real-Estate 2 03-19-2011 03:02 AM
As part of the "Small Business Jobs Act of 2010 Tax Provisions, IRS allows increased expensing limitations for 2010 and 2011 for certain real property treated as Code section 179 property. TaxGuru General 0 01-31-2011 07:58 PM
moving money between business and personal texastaxpayer S-Corporation 1 03-25-2009 11:46 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.