Title: What are Leasehold Improvements? - Definition | Meaning | Example
Headings: What are Leasehold Improvements?
What are Leasehold Improvements?
What Does Leasehold Improvements Mean?
Example
Summary Definition

Content: What Does Leasehold Improvements Mean? What is a leasehold improvement? When a prospective tenant enters a commercial property, it very rarely meets the exact specifications of the tenant’s business. When changes to the property are required, they are called leasehold improvements. These improvements are typically discussed during the negotiation of the lease; although, they may be required by the tenant at any time during the lease term. Depending on the marketability of a rental property, a lessor may provide improvement incentives to make the property more attractive to prospective tenants. If the lessor does not provide financial support for the improvements, the burden of cost falls on the tenant who will account for the costs appropriately. How are leasehold improvements accounted for? In accordance with generally accepted accounting principles ( GAAP ), as well as the IRS tax code, the accounting for improvements is similar to accounting for fixed assets.