How are TI allowances typically handled during disposition?
Tenant has a few years of term remaining and just exercised an early extension. As a concession for the early renewal there was a TIA included in the deal. The allowance will not be funded until the commencement of the renewal term.

Ownership is evaluating a disposition and we’ve put it out for BOV. The broker we spoke to said that the full amount of the TIA would be credited to the buyer at closing. Is this typical? I would have guessed that the presence of an unfunded TIA would already be accounted for in the offering price versus specifically credited at close.
[{"id": "imgfkyt", "text": "No right answer honestly. You\u2019ll want the income from the lease capitalized into the price of the deal so I\u2019m sure when whoever brings it out to market, they will be showing that income in place already. It will be up to buyers what cap rate they apply. Usually that\u2019s something that would get sorted out when you receive LOIs and you can make sure everyone is treating it the same way.", "replies": [], "depth": 1}, {"id": "imgnq5u", "text": "Speak to your accountant to see if you would still be eligible but keep the CARES act in mind with regards to TIA. If you place this in a reserve at time of sale vs discounting from price I\u2019m curious if you claim depreciation\u2026\n\nTenant improvements which qualify as QIP can be 100% depreciated in the first calendar year of use.  This 100% bonus applies to QIP which is placed in service after September 27, 2017, and before January 1, 2023. Because of the new technical amendments, taxpayers that make or have made improvements to their facilities may take steps to claim the missed 2018 100% bonus depreciation. This bonus depreciation is reduced 20% per year starting in 2023.", "replies": [], "depth": 1}, {"id": "imhfxpl", "text": "It's generally credited at close. Buyer needs to review leases/receive disclosures from seller laying out concessions - can't really preemptively net from your offer if you don't know what the amounts are.", "replies": [], "depth": 1}, {"id": "imhk7qr", "text": "Yes in my experience this is how it\u2019s typically handled. I recall one in particular that had structured all of the leases for the tenants to opt when to receive their TI so all of the remaining balances were disclosed in the offering memorandum with a statement that it would all be credited at closing. So the institutional seller clearly expected it before even marketing the property. I\u2019ve always thought of it as how security deposits are handled.", "replies": [], "depth": 1}, {"id": "imjwgap", "text": "If you want credit for the tenant being there another 3 years on your purchase price, then yeah...credit to buyer at closing. Can't have it both ways as a seller.", "replies": [], "depth": 1}, {"id": "imlso80", "text": "Yeah it\u2019s usually a credit to buyer. You do that for unfunded capex/lcs", "replies": [], "depth": 1}]