Board Topic: Purchase a lease to take over the business
Click here to view this topic in its original format
LoanUniverse Community > General Chat >

Purchase a lease to take over the business

Posted by: Di Oct 13 2004, 06:51 AM
I am in the process of purchasing a lease on a gas station for 70000.
The amount of time left on the lease is 66 months. Can I amortize the lease as a deduction. I know the 2200 month is deductible. Is the 70000 divided by 66 a deduction each month?

Posted by: loanuniverse Oct 13 2004, 07:55 AM

You know this is not really a commercial lending question smile.gif But, I am in a good mood so I did some research.

From the IRS site

Cost of Getting a Lease
You may either enter into a new lease with the lessor of the property or get an existing lease from another lessee. Very often when you get an existing lease from another lessee, you must pay the previous lessee money to get the lease, besides having to pay the rent on the lease.

If you get an existing lease on property or equipment for your business, you generally must amortize any amount you pay to get that lease over the remaining term of the lease. For example, if you pay $10,000 to get a lease and there are 10 years remaining on the lease with no option to renew, you can deduct $1,000 each year.

The cost of getting an existing lease of tangible property is not subject to the amortization rules for section 197 intangibles discussed in chapter 9.

Option to renew.  The term of the lease for amortization includes all renewal

The source can be found on chapter 4 of the "business expenses" publication here:

By the way, I am not an accountant or a tax advisor, and read my disclaimer.


Comments are closed.