Which type of improvement is specifically made to enhance leased property?

Leasehold improvements are custom enhancements made to a leased property to better suit the needs of the tenant. These improvements can include alterations like installing new lighting, building walls, or modifying layouts and other adjustments that make the space more functional for the tenant's specific use.

In a lease context, these improvements are typically considered the tenant's property, meaning they are integrated into the leased space for their benefit. They may not increase the overall property value in the same way permanent fixtures do, as leasehold improvements generally remain with the property at the end of the lease term unless otherwise specified in the lease agreement.

Understanding this concept is crucial for property assessment and accounting, particularly in determining the value of personal property tied to leased assets. It allows appraisers and assessors to differentiate between improvements that add value to the property itself and those tailored for the tenant's use.