Is cell tower income taxable?

Is cell tower income taxable?

Selling your cell tower lease is not without tax consequence. Typically, the proceeds from a cell lease buyout are taxed as capital gains. However, there is potentially a way to defer taxes on the sale. The answer is a 1031 exchange.

How is the sale of a lease taxed?

The sale of the property at the end of the lease term is subject to sales or use tax. Any lease of the property by the purchaser/lessor to any person other than the seller/lessee would be subject to use tax measured by rentals payable.

How are cell towers taxed?

Typically the way most tax provisions work in cell tower lease agreements is in the event the property tax bill goes up due to the installation of the cell tower, the property owner pays the increased amount and then sends proof of payment of the bill and last years’ bill to be reimbursed by the tenant.

What happens to cell tower lease when the property is sold?

A cell tower lease buyout occurs when a property owner agrees to sell his or her lease to a ground lease acquisition company, such as Landmark Dividend, for a lump sum of cash. While the lump sum is often a significant amount of money, it is less than the cumulative value of the monthly rent over the life of the lease.

Is a lease buyout tax deductible?

The proceeds received from a lease buyout are definitely taxable. In some cases the tenant can receive favorable capital gain treatment on the lease buy out. Sec 1241 – states that amounts received by a lessee for cancellation of the lease shall be considered as amounts received in exchange for such lease or agreement.

Is lease rent taxable?

The entire lease rentals will be taxed as income of the lessor. The lessee, correspondingly, will not claim any depreciation and will be entitled to expense off the rentals. If the transaction is a hire-purchase or conditional sale transaction, the hirer will be allowed to claim depreciation.

Are cell towers real or personal property?

The law does not specify whether cellular towers are personal or real property, but most assessors treat them as personal property. By law, personal property owned by some telecommunications companies is subject to state, rather than local, property tax assessment.

How much does it cost to remove a cell tower?

It can cost from $50,000-$75,000 to remove the tower, the foundation, the underground cabling and any remaining equipment that needs to be removed.

Are buyout payments taxable?

Buyouts are included as an item of gross income and are considered as fully taxable income under IRS tax laws. Thus, a buyout is taxable in the year of payment, regardless of the year in which the buyout is authorized, unless the employee is required to repay the buyout in the same tax year.

Why choose tower advantage for cell tower lease buyouts?

Since Tower Advantage completes millions of dollars of cell tower lease buyout transactions on a yearly basis, our clients benefit from that extensive transactional experience. For instance, we can often secure purchase terms for shorter time periods, but at the same price as what you could obtain for 99 years or longer.

Do cell towers own their own property?

Cell tower companies and wireless carriers rarely own the property upon which they construct a cell tower or install rooftop antennas. As a result, these companies preferred method of occupying and using a property is via the entry into a lease agreement with the property owner to allow their cell tower and associated equipment to be operational.

Should you sell your wireless telecommunications lease?

Selling your wireless telecommunications lease is truly the only way to hedge your risk against losing the site to carrier consolidation and the possibility of the cell tower becoming obsolete due to future changes in technology, such as the mass deployment of 5G antenna nodes.

What are the components of a cell tower lease transaction?

The transaction usually has two major components. The first being an assignment of the right to collect rents from the property owner to the company purchasing the cell tower lease.