True Tax Lease in a business room

True Tax Lease: How Does It Benefit Your Business?

There are multiple benefits of using a true tax lease to fund your commercial equipment needs. Regents Capital breaks it down for you.

There’s no other way around it: commercial equipment is expensive, especially for small businesses and start-ups. Purchasing equipment is not the only option, though. Equipment leasing is a more manageable way to get the equipment you need while spreading out the costs over a fixed period of time.

Leasing terms typically run from 24 to 72 months. Contracts can run for much longer, too, depending on your business needs. Either way, considering how new technologies are regularly added to commercial equipment, you do not have to worry about being stuck with obsolete equipment in the long run.

If you’re looking into equipment leasing, one of the best options is a true tax lease. And here, Regents Capital breaks down the reasons you should consider getting this type of equipment lease.

How Does a True Tax Lease Work?

A true tax lease is a multi-year equipment leasing option where the lessee gains exclusive use and possession of the equipment throughout the specified period. Ownership rights do not typically pass on to the lessee but at Regents Capital, the end-of-term buyout option is always on the table.

The name “true tax lease” stems from the fact that the lessor takes charge of all accounting requirements and tax benefits. Meanwhile, lessees pay lower upfront costs and can put monthly payments under capital or operating expenses. These payments are typically lower than non-tax leasing options.

Regents’ true tax leases include stretch, skip payment, step payment, and operating leases. Each one has multiple tax advantages. The lease period is also usually shorter than the equipment’s economic life.

Through operating leases and similar leasing options, you can get up to 100% financing for your required equipment. Soft costs like transportation and installation are also included.

How Do Businesses Benefit from a True Tax Lease?

True tax leases are a sensible option for business owners because the leased equipment doesn’t count as a company asset or liability. Yet, because the leased equipment generally counts as a rental expense, it still qualifies for tax incentives. Here are more ways businesses benefit from a true tax lease:

No Bank Restrictions

True tax leases take away the hassle of blanket liens, escalator clauses, restrictive agreements, and other restrictions that are typically linked with traditional lending institutions.

100% Financing Options

Equipment leasing doesn’t only involve the actual equipment. Businesses also have to consider soft costs like delivery and installation which can be covered by a true lease agreement.

Flexible Payment Options

Unlike with finance leases where ownership is transferred to the lessee after the lease term, the lessor retains ownership after a true tax lease. This helps keep monthly payments flexible.

Off-Balance Sheet Financing

The off-balance sheet financing option could count as operating expenses and make your payments 100% tax deductible, instead of just depreciation and interest deductions.

Secure Your Equipment Financing with a Trusted Partner

Regents Capital has direct funding capabilities that change the way businesses finance equipment. And we can provide affordable and transparent financing for your business.

Contact a Regents Agent today and learn about the financial service that works best for you.