The tax costs to a landlord of agreeing an extension of a residential lease with their tenant can be unexpectedly large if this is implemented as a surrender and regrant transaction. However, a more cost-effective route may be available. Granting a lease of the reversionary interest in the property using what is termed a ‘concurrent’ lease, leaves the existing lease unaltered for tax purposes but achieves the same rights to occupy for the tenant. Failing to identify this option for landlords might prove to be an expensive oversight for their advisers.
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The tax costs to a landlord of agreeing an extension of a residential lease with their tenant can be unexpectedly large if this is implemented as a surrender and regrant transaction. However, a more cost-effective route may be available. Granting a lease of the reversionary interest in the property using what is termed a ‘concurrent’ lease, leaves the existing lease unaltered for tax purposes but achieves the same rights to occupy for the tenant. Failing to identify this option for landlords might prove to be an expensive oversight for their advisers.
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
