Grant of short lease
You'll learn how short lease premiums are taxed differently from long leases, and how to calculate the income tax element using the statutory formula.
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In this lesson
- 0:00 Grant of a short lease explained
- 0:29 Tax treatment based on lease length
- 1:00 Calculating short lease premium formula
- 1:16 Common mistake with premium calculation
- 1:39 Income tax timing for landlord and tenant
- 2:27 Worked example: Kaya and Siena lease
About this lesson
This video covers the key distinction: premiums on leases over 50 years are taxed as capital gains, but short leases split the premium between income tax (on the landlord) and capital gains tax (the non-examinable portion). You'll see how to apply the formula (premium minus 2% × years minus one × premium) to find the taxable income, and how tenants with a business can spread their deductible expense across the lease term. Essential for TX and ATX, this technique appears regularly in property income questions.
Duration: 4m
Transcript
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