What are leasehold improvements?

Leasehold improvements refer to the modifications or alterations made to a leased property specifically to meet the needs of the lessee (the tenant). These improvements can vary widely, ranging from simple cosmetic changes like painting and carpeting to significant alterations such as constructing new walls or upgrading electrical systems.

The focus on customization is key; leasehold improvements enable lessees to tailor a space for their specific business operation or personal requirements. This can enhance both the functionality of the space and the overall experience for those using it.

In this context, the other options do not capture the essence of leasehold improvements. For example, costs incurred for utilities are ongoing expenses rather than modifications aimed at customization. Legal fees associated with starting a lease relate to the contractual aspects of leasing but do not pertain to physical changes in the property. Lastly, improvements made by the lessor typically refer to upgrades made by the property owner, and while they might enhance the lease conditions, they do not qualify as leasehold improvements, which are specifically those changes instigated by or for the benefit of the lessee.