Private use of property owned by a government entity may create a taxable possessory interest or leasehold estate, depending on the jurisdiction and the applicable facts. The lease terms, remaining duration, renewal provisions, rental obligations and allocation of tax responsibility can affect the analysis. PTA reviews the assessment in light of the governing documents and applicable law.
Factors our consultants review
- The remaining lease term
- Renewal options and related conditions
- Contract rent compared with current market rent
- Responsibility for property taxes under the lease
- Restrictions on assignment, financing or alternative use
- The relationship between the taxable leasehold interest and the underlying fee-simple estate