What is meant by "leasehold interest"?

"Leasehold interest" refers specifically to the rights held by a lessee in a leased property. This encompasses the legal rights and benefits that a tenant has during the term of the lease. Essentially, when a lessee enters into a lease agreement, they acquire a leasehold interest in the property, allowing them to use and occupy the asset according to the terms set forth in the lease contract.

This interest does not equate to ownership of the property itself; rather, it represents a legal right to utilize the property for a specified period, under defined conditions, while paying rent or other considerations to the lessor. The leasehold interest is crucial in distinguishing between ownership (held by the lessor) and the temporary rights associated with leasing (held by the lessee).

The other options relate to aspects of leasing and property rights but do not accurately capture the essence of what a leasehold interest is. For instance, while the right to modify leased premises or sublease could be implications of the lease, they are not the fundamental definition of leasehold interest itself. Ownership of the underlying asset is also separate, as leasehold interest does not confer ownership rights.