Not true. Capital improvements paid by the tenant of a rental unit can be depreciated as 'leasehold improvement' or 'qualified improvement property'.
- It's common for a lessor or lessee of a building to construct leasehold improvements to make the rented space area work for the business needs. These leasehold improvements are depreciated separately from the building. When a lessor pays for construction of the improvements, the lessor claims the depreciation.
- IRS Publication 946
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