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Depreciation of fixtures & fittings over lease period with break clause

Depreciation of fixtures & fittings over lease...

If a company is taking a new 10 year lease on some premises (with a 5 year break clause), over what period do you depreciate the fixt's & fitt's? 10 years or 5? or is there a choice?

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07th Jun 2011 08:01

There is a choice.

As long as they can get it past their auditors the depreciation policy is up to the directors as it has no bearing on tax.

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07th Jun 2011 10:41

Mmm ...

Presumably, we are talking about tenant's improvements to the leased property and not about any moveable fixtures and fittings.

If the landlord has the right to end the lease after 5 years, I think you cannot do anything other than depreciate to nil within the 5 years.  If only the tenant has the right to break the lease, you could depreciate over any period up to the full 10 years of the lease.

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