Leaseback, as opposed to the classic finance lease, involves participation in a transaction not three parties (seller, lessor and lessee), but two.It is this kind of leasing, in which the seller of its object and lessee are the same person.It is an effective tool for working capital or refinancing of capital investments.It is more profitable than an appeal to the bank for a loan or purchase at their own expense new assets.
What is the mechanism of such operations?How does leaseback?The company sells its own property leasing company and immediately becomes the lessee (take it out).That is, the client gets 100% of the value of the property, and while it remains in its use ("return").This way you can get the working capital without additional funding.
Lies at the same time two of the contract (sale and delivery of leased).This deal resembles the issuance of credit secured only costs will be lower than it pays interest.In addition, the lease-back allows the company to minimize tax expenses as lease payments are fully included in the cost of production.Save on taxes and possible through the use of accelerated depreciation, which is permitted in this case.At the end of the contract the property at depreciated cost (nearly equal to zero) moves to the balance of the enterprise.Therefore, using a reverse leasing, you can reduce the tax on such property to the symbolic dimensions.
Property Organization (Company) in this case does not change the actual location, and may continue to be used in the production process.
However, there are certain nuances to enter into such transactions.Therefore, to assess the risk of potential lessee before entering into the contract must calculate the tax consequences of that transaction is not proved unprofitable.This is especially significant if you want to take the equipment, machinery or vehicles for leasing are recorded on the balance sheet of the recipient at a lower price, because the taxes are calculated based on actual prices.
tax authorities rather strictly monitor leaseback transaction (suspecting the possibility of fraud with payment), paying attention to those enterprises that have problems with record keeping and tax accounting.Leaseback is used for improvements in balance through the sale of assets not depreciated, and the market value, which is usually substantially higher than her.But the law does not prohibit the leasing lessor to buy the property from the owner.Therefore leaseback agreement fully complies with the requirements of the legislation.
However, it is not recommended to enter into such transactions too young companies that have not matured economically.Leasing is justified in times of a major upgrade of stable businesses that currently do not have the funds or who lack the capacity (time) to find a suitable financing options.
