Do tenant finish construction costs need to be capitalized? i.e. the tenant that paid for the improvement of the property does not OWN the property that was improved. Thank you.

Do tenant finish construction costs need to be capitalized? i.e. the tenant that paid for the improvement of the property does not OWN the property that was improved. Thank you.

If the tenant acted at the request of the owner, then yes it can be capitalized. The costs incurred by the tenant may be reimbursed or adjusted from rent payments as may be agreed between the tenant and the owner.

If the tenant has acted on his own to make amendments to the property without the prior written consent of the owner, it can not be capitalized, Rather, the tenant will have to restore the property to its original condition when the tenant leaves.