Real estate leasing
Real estate leasing is very popular in Russia.
Real estate leasing isn’t necessarily aimed at financing new objects’ construction. With its help the enterprise being the property keeper of the location can get liquid assets and reserve the place.
One of the main differences between leasing and real estate mortgage is that in mortgage credit lending legal relations are topside, while in leasing transaction they’re in the middle distance, however, in both cases they act as a guarantor of returning expired asserts. Sooner or later any company wants to take possession of a building whether it's an office building or a manufacturing area. However one-time diverting of means at such a purchase can be ineffective.
Applying to the bank can also bring you to nowhere: inland banks are reluctant at giving long-term credits, and companies sometimes lack support. Besides under applicable standards the property bought on credit can’t serve as its support. To solve the problem the head of the company has to turn to real estate leasing under which the property transfer to the creditor is available. This equipment has to be acquired in line with the intended use of credit.
Contract base of real estate leasing transaction has a slight difference in comparison with other leasing subjects. Leasing agreement between the lessor and the lessee and buy and sell agreement between the leasing company and real estate object seller are in its core.
As a rule the leasing agreement is accompanied with the credit agreement, (agreement on attracting financial assets) and the contract of pledge (guarantee contract and e.t.c.). Sell and buy agreement is concluded together with ground tenancy agreement where the leasing object is erected. The privileges linked with the leasing don’t spread over the last agreement (that is the rule of advanced depreciation with index 3 and further transfer of property to the lessee after fulfilling all the liabilities under the leasing agreement).
Some companies need to take possession of the property, for example an office building or a manufacturing location. But not all companies can divert their assets at such a purchase. Besides diverting assets can be ineffective. Company’s tax liabilities can be among its drawbacks, but it significantly reflects on acquiring property. So, what shall we do with the problem? Real estate leasing can come handy.
Why real estate leasing?
Among all three methods of property acquisition (direct purchase with your own assets, acquisition in credit and leasing acquisition) real estate leasing can be the most effective.
First of all, your applying to the commercial bank can be futile. Banks are reluctant at giving long-term credits, and companies sometimes lack support. Besides under applicable standards the property bought on credit can’t serve as its support). Another plus of real estate leasing is that you can optimize tax liabilities.
There are a lot of tax allowances connected with the real estate leasing, for example: the right for advanced object depreciation and property transfer to the lessee after the fulfillment of all his liabilities under the leasing agreement. The use of advanced depreciation with index 3 makes it possible to cut property tax contribution. It’s important that all leasing payments are at the lessee’s expenses. Taking into consideration tax allowances when using leasing, release of your own assets for manufacturing enlargement, the efficiency of acquiring real estate in leasing is much higher than acquiring it at your own assets or in credit.
How does real estate leasing work
Concerning the real estate leasing you can transfer the property to the creditor on mortgage, if the property acquired in line with the credit purpose. As far as documents are concerned real estate leasing transaction slightly differs from those with other leasing objects: the lessor and the lessee conclude a leasing agreement, and the leasing company concludes a buy and sell agreement with the real estate seller. The leasing agreement is often followed with: the credit agreement (agreement on attracting financial assets) and the contract of pledge (guarantee contract and e.t.c.).
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