Chapter 13 - Sale of Leases

Question 1

Definitions

Answer 1

A lease if the right to use an asset.
Freehold is ownership of a property outright
Lease is a piece of paper that allows a tenant/lessee the right to occupy someone else’s property

Question 2

Assignment of a Lease

Answer 2

Legal term for sale of a lease is assignment.

Question 3

Long Lease

Answer 3

Lease with more than 50 years left to run

Question 4

Short Lease

Answer 4

Lease with less than 50 years left to run

Question 5

Assigning a Long Lease

Answer 5

Sale of a long lease is done using the regular CGT rules

Question 6

Assigning a Short Lease

Answer 6

S/P x original cost
S = % for years of the lease remaining at sale
P = % for years of lease remaining at purchase
Depreciation %s are in the tax tables