depreciation of apartment on land not owned. ( Penna )

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Latest post Sun, Mar 5 2017 7:33 AM by Drew. 3 replies.
  • Sat, Mar 4 2017 6:05 PM

    • Drew
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    depreciation of apartment on land not owned. ( Penna )

    A builds a 30 unit apartment on land owner by B.  A has no agreement to ever buy B land.  B leases the land to A for a 10 year lease....the lease does not contain renewal options . 

    THere was an existing 30 unit building on Bs land, A tore it down, dig a new foundation and erected a new building.

    WHat is likely depreciation schedule for A ? 

     

     

     



  • Sun, Mar 5 2017 12:48 AM In reply to

    Re: depreciation of apartment on land not owned. ( Penna )

    Does A own the building? The fact that A built it does not automatically means he owns it. Generally permanent improvements built on land owned by another will be owned by the owner of the land. If A doesn't own it, A isn't going to get to depreciate it. 

  • Sun, Mar 5 2017 7:21 AM In reply to

    • Drew
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    Re: depreciation of apartment on land not owned. ( Penna )

    The paper trail is pretty clear that A owns the building erected on Bs land . And there is a ten year lease for the land in place . 

    Is some convoluted expensing of building project over the life of the lease possible to fly with IRC ? 

     



  • Sun, Mar 5 2017 7:33 AM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on Thu, Mar 30 2000
    • PA
    • Posts 51,376

    Re: depreciation of apartment on land not owned. ( Penna )

    A and B are not related parties .

    My thinking is that 26 CFR 1.178  might allow lessee to depreciate /expense the building on the 10 year lease ? 



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