Find distinctions

Why at uniform definition of concept "leasing" it is accepted to distinguish leasing of real estate from other kinds of leasing transactions? first essential difference concerns time of transaction. period when it is impossible to terminate contract at leasing a personal estate, makes 3-7 years, at leasing real estate this term reaches 10-15 years. However in latter case practically always contract provides an opportunity of addressee of leasing ahead of schedule to redeem object. However, if not this circumstance, leasing of real estate would be absolutely rare transaction in market.
Second difference is based on use of extra means of owner of leasing from different sources. For example, companies, personal estate engaged by leasing, get equipment and other objects through bank credit whereas real estate is got basically due to resources of financial market.

A variety of kinds

In theory and in practice, without dependence from objects of transaction, there are three kinds of leasing: financial, operative and returnable. most popular kind - financial assumes scheme at which leasing contract consists for term of amortization of property with subsequent purchase. Operative leasing essentially differs from financial, first, for. As a rule, contract of operative leasing consists for term of, much more smaller term of amortization, namely, for some years.
Secondly, at operative leasing after payment of all leasing payments stipulated by contract, property right to property does not pass. This variant is convenient that who doubts of financial opportunities of enterprise in far future. After term of party can quite conclude second contract. And such reusable using is possible before expiry of term of amortization of object.
Third kind, returnable, enjoies special popularity in USA where legislation assumes greater enough privileges at such transaction. At first sight, scheme of returnable leasing can to surprise, to put it mildly. proprietor sells property to other person, and then gets in using same property under contract of leasing. It at all a way to have a good time and allow to earn additionally leasing company, and effective enough way quickly to involve money resources at insufficient liquidity. matter is that under legislation of USA leasing payments are subtracted for purposes of taxation. Besides returnable leasing approaches basically for objects with expired for amortization. At us returnable leasing too is often enough used for fast liberation of turnaround means.

Let's think for three

One of important distinctive parties of leasing of real estate can be named presence of several parties of transaction. First, it is seller of real estate. Secondly, buyer, that is leasing company. If it is not enough own means, owner of leasing takes credit for purchase of object of real estate in bank. So, thirdly, it is bank-creditor. Well, and fourthly, certainly, addressee of real estate. To consider other intermediaries, like insurance companies, any more we shall not be. And so quite impressive chain turns out. But, as is known, there, where it is a lot of communications, often there is a mess. For example, one only transfer of property rights of that costs! state registration which mechanism in Russia still leaves much to be desired is Continually necessary. Many problems arise also in case of cancellation of transaction for any reasons. For example, Tax code of Russian Federation, in opinion of experts, not precisely enough registers account on leasing real estate, namely, does not establish order of write-off of incomes and charges at cancellation of transaction, change of term of contract or preschedule repayment. It is rather sad, in fact leasing of real estate - not purchase of a teapot, and to risk similar impressive sums not to everyone it will want.

To give or to not give?

Leasing of real estate has weight of advantages in comparison with rent or, say, bank credit. We shall begin with procedure of conclusion of transaction. If company is going to take credit in bank for this purpose it is necessary to give documents confirming solvency of enterprise and so-called credit history. With last at many business is heavy. What there history if many companies exist in market a very short time, and mechanism of crediting became accessible rather recently. This problem of newly appeared businessmen especially weighs. For development of business means are necessary, they can be taken on credit. But for this purpose it is necessary to have already means for mortgage. All by a principle " in morning chairs, evening of money, but money forward ". leasing companies will conclude contract even if enterprise only just begins way in market. Do not think, it not charity; Simply, if you will list leasing payments with delay, or in general them do not list, real estate at you will easily and quickly select. In leasing transaction object also is mortgage, that considerably facilitates disputes at non-payment. For this reason for firm it is not obligatory to have credit history, real estate in leasing is quite accessible. However here it is necessary to count on forces, differently it is necessary to regret for missed opportunities of status of addressee of leasing bitterly.
By way, it is not necessary to confuse leasing of real estate to mortgage, despite of their obvious similarity. At hypothecary crediting mortgaging attitudes have primary character. At leasing transaction they can be secondary, or frequently in general to be absent. But also in this case object of real estate remains maintenance of a reflexivity of means.

Financial party

Speaking about financial benefit of leasing of real estate, it is necessary to note both direct, and indirect positive moments. For example, if head was going to use a premise nearest ten years mechanism of leasing will allow to avoid superfluous overpayments. Only imagine, as rent will grow at a current rate of inflation! And leasing will allow not only to transfer into account owner of leasing sum stipulated by long-term contract, but also to redeem property at residual cost in view of amortization. Certainly, such benefit is obvious only to those companies which set as purpose to exist long time for one place. I shall result an indicative example. large trading organization has got some premises of a capital building under contract of leasing. In 2001 cost of premises under contract has made 8 million roubles. contract has been concluded for period of 10 years, and total sum of payments in view of inflation has made 22 million roubles. In 2006 object have estimated in 20 million roubles, meanwhile, there has passed only half of term of contract. Benefit, as they say, is obvious.
Important point is additional economy under tax to property at leasing. All matter is that at leasing real estate appears an opportunity to use accelerated factor of amortization. Besides it charge of amortization is possible even then when real estate is not used, and actual amortization is small. However it is necessary to remember, that this variant operates only in that case when property is on balance at addressee of leasing. accelerated factor of amortization promotes fast deprecication of an active, and, accordingly, reduces tax to property. Experts consider, that at use of accelerated amortization size of charged tax to property of firm can decrease practically twice, rather than in case of with charge of amortization under average specifications.

Do rates, Lord!

Besides all these financial blessings, it is possible to be glad and to that fact, that all leasing payments, without dependence from that, is used property or stands idle, it is possible and necessary to write off on cost price. There is one more quite greater benefit of leasing in comparison with bank credit. If property is got on credit, addressee under law has right to write off percent under credit for cost price. Thus it is known also what to write off it is possible only percent under rate which does not exceed rate of refinancing of Central Bank, increased on factor 1,1. This size remains 14 % equal approximately. rate of banks under credit usually varies from 17 up to 22 % so difference between percent to write-off and credit rate makes 3-8 %. This part should be paid already from profit. And in case of leasing transaction owner of leasing includes all charges under credit in leasing payments which addressee of leasing with pure conscience carries on cost price in full. Besides cost of real estate grows in Russia not on days, and on hours, and rise in price incorporated in leasing transaction usually makes 14-16 % a year that pleases also in comparison with annual credit rate of bank. Here such pleasant arithmetics.

Laws of leasing

Regulation of leasing at state level has arisen in 1994 when time position has been published, called to adjust development of leasing in investment activity. On it, fortunately, legislators have not stopped, and in 1996 second part of Civil code in which regulations about leasing have been registered in more details was published. However, and on it all has not ended: in 1998 basic Federal law " About leasing " has been published. But, as is known, in Russia all very quickly varies, and in 2002 law has been seriously modified and changed. About leasing at a normative level it is registered enough, and great bulk of participants of leasing transactions is happy. Though I shall note, that majority complain about too bureaucratical procedure of registration of leasing transaction when it is necessary to shine each step for supervising bodies. And at observance of different sequence in registration owner of leasing can have serious problems connected with interpretation by supervising bodies of transaction as rent.
By way, description and fastening of concepts and procedures of leasing at a legislative level has occured more quickly, than it was necessary. So, for example, leasing of real estate resolved by Civil code, simply has not been demanded, as term of leasing transaction is equal to term of amortization of object of transaction. Average term of amortization of property - from 10 years and more, but transactions with such for period of crisis of centuries in our country were too risky, and, accordingly, were not popular. In spite of fact that amendments to Law " About leasing " in 2002 have allowed to stipulate any term of leasing transaction under real estate, it became easier not. Project cost of real estate is high, and from financial point of view logically to conclude transaction for long term. Certainly, it is impossible to tell, that all so is bad. If earlier credit gave for 3 years now and 5 years are a small term. national economy is stabilized, and already now experts mark smooth tendency to increase in a share of leasing transactions under real estate.

Let's agree?

As to joke of cost of real estate it is not necessary, leasing contract demands careful study by competent lawyer. However and to head it is necessary to know certain moments of document and possible reefs. For example, it is important to specify, what will choose seller of property from parties and object. Do not think, that it always buyer, happens and on contrary. Besides necessarily it is necessary to stipulate, who will take property on balance-ëèçèíãîäàòåëü or addressee of leasing. It is extremely important, as presence on balance of a large active demands additional account and calculation of amortization. main thing, not " to miss ears " and to solve this important point during negotiations.
Certainly, not less actually to discuss powers of addressee of leasing in relation to property and its responsibility for a condition of object, and also order of its service. Leasing payments sometimes register separate appendix as their sequence and volume can be stipulated individually. In this connection, at - it is necessary for preparation for signing contract to solve for itself, what schedule of payments will be most comprehensible to your organization in financial plan. And then it is necessary to work to convince of it owner of leasing. Without dependence from an expected outcome of transaction it is necessary to register also in contract distribution of rights at changes brought by addressee at using by object. It is a question of repair, as current, and about capital, about carry of electric sockets, about posting additional cables, about a telephony and other necessary things. If to forget about this item, there is a high risk to hear charges in address, and if transaction has burnt through ahead of schedule also to fly by with means enclosed in repair which anybody any more will not return. Speaking about force-majeur, and also damage and destruction of property on someone's fault, necessarily register possible measures. Remember, legislation in this plan has greater flaws so to get out in case of troubles it is necessary own mind.
Except for disputable moments, contract of leasing includes also quite usual items, like terms, duties, rights of parties. As leasing of real estate-has put large, in financial and physical sense, do not forget about insurance of every possible risks. In general, as well as at any large transaction, to drawing up of contract it is necessary to approach in sober mind and with firm memory. Having provided probable events and taken in advance legal measures, it is possible not only to secure itself, but also to partner under transaction to render service. How to be spoken " rescue rolling-handwork most drowning ". And it is even better to spread straw in advance.

Main person

In leasing transaction object of real estate plays leading part that is why also requirements to its condition stipulate in advance. And, even if organization itself has chosen for itself object, leasing company can quite oppose, having shown conditions.
basic condition for all companies is status of object. It should be only commercial real estate. Some owners of leasing will not consider at all transaction if object does not concern to capital structures. In it there is a greater share of sense as " a shed ", collected on a method of children's designer, it is possible as easily to disassemble and carry away pavilion of type. Besides minimal project cost of real estate is always defined by rigid frameworks. It is caused, first of all, by a high overhead charge for conducting transaction. However range of cost very strongly varies depending on a level of company. If owner of leasing himself works in market recently, it can give object in cost from $20000 up to $1500000 and if it is leader, that a low rod of cost, as a rule, will make $2-3 million technical condition of object of leasing is important also. estimation will start with purposes for which real estate is got. In general, former public toilet will precisely demand major overhaul before it will use under a beauty salon. It is necessary to tell, that leasing company will examine captiously enough object, in fact in case of discrepancy of its object in view addressee of leasing can not achieve industrial results so, becomes insolvent. It can be named one more advantage of leasing of real estate. Even if you are insufficiently competent of technical questions of equipment of a building, you are insured by owner of leasing.
Besides listed qualities of object of real estate, to obligatory consideration its profitableness is accepted also. Last depends not only on characteristics, but also from its ability to make additional profit. In this case I shall give an example. One small trading company has decided to get a building of shopping center in leasing. At moment of conclusion of transaction on a part of areas of center contracts of rent which send to addressee of leasing have been concluded. Certainly, additional business has added price of transaction, however greater liquidity of object was an essential guarantee both for owner of leasing, and for company.

Strong endurance

In leasing transaction year of construction of object of real estate is unexpectedly important. majority of leasing companies in case of participation in contract of new object use standard scheme. For example, if term of contract is less, than time of amortization, even at its accelerated charge on results this object is all same redeemed by addressee at residual cost. This final price of repayment in view of amortization also defines a balance project cost for addressee of leasing. However after a capture of object on balance amortization is already charged by usual way. All, apparently, is logical. But tax bodies frequently treat similar procedure as incorrect from point of view of law a way to lower profit tax. As law clear in this occasion does not speak anything, majority of trials come to an end in favour of company. And still, if there is no desire to have legal proceedings for truth, choose object not first freshness. Last, in turn, can be constructed though in days of yore, and working life, that is term of operation, can pass in general. It is necessary to know, that on such buildings all same it is necessary to establish term of use which period is defined at will of parties, but thus should make not less than 7 years.
As to ground on which there is a building with it too there are certain complexities. Under law ground cannot be object of leasing, therefore addressee of leasing should take it in rent for all term of contract of leasing. After that ground is redeemed level with object. In this connection reception in leasing separately costing building demands additional papers, time and, certainly, finance. It is no wonder, that in leasing transactions built in premises use greatest demand nevertheless.

Hand of support

Unlike banks, leasing companies are real assistants in becoming and development of young organizations. That indisputable fact was already marked, that credit to receive much more difficultly, rather than to get real estate under leasing contract. But except for this advantage to new companies there are some more pluss of leasing transactions. For example, having addressed to owner of leasing, it is possible to save time, having given to it searches of object suitable for you. Besides, companies constantly working with real estate, will independently pick up an optimum variant more quickly and more reliably, will check up correctness of registration of property rights and other documentation. Besides conclusion of leasing contract does not mean a capture on itself of additional charges as it frequently occurs in case of to banks. last at times will not forget to take indecently greater commission for opening of loan account, and also oblige payer to translate turnaround payments in bank-creditor. At becoming new business such charges can appear simply inadmissible luxury. Therefore, in spite of fact that credit is considered by majority as cheaper way of purchase of real estate, leasing transaction it is sometimes more favourable than a condition. And about cheapness also to argue it is possible if to take tax party of a question, especially.

Stick about two ends

Let's try to understand with a question on from parties of leasing contract it is more convenient to them to take object of real estate on balance. law that is remarkable, in this plan gives a free hand. So, to take or to not take? In case firm began to consider property on balance, it should designate its initial cost in view of not only prices of object, but also additional charges, like insurance. Such overestimated cost, accordingly, will lead to increase in tax at property. But do not try to think up a way to cheat partner under transaction to convince it to take property on balance. Strangely enough, but for this purpose there is quite proved proof. There Is, after conclusion of leasing contract a property left on balance of leasing company, passes to account " Profitable investments in material assets " and tax to property, certainly, is not assessed. By way, if you do not discuss this moment with owner of leasing in advance it on simplicity sincere can start to charge tax which automatic device will join in leasing payments. In general, question of statement on balance demands open discussion, and that it is possible and to outwit itself.
Besides this advantage, statement of real estate on balance of owner of leasing will be favourable from point of view of book keeping, and to both parties. For addressee of leasing occurrence of object means complication of accounting calculations, and rather greater. Such doubtful entertainment is increased also by that charge in tax account considers payment under leasing transaction, and in accounting-charged amortization. sums, certainly, do not coincide. If you do not wish to check chief accountant on clearness of thinking, do not take object of leasing on balance. At owner of leasing property, in connection with features of book keeping, will be considered much easier. And difference any there and division of concepts, all as at people. Besides balance of your enterprise becomes even more nice, in fact duty under transaction will not be reflected in a passive. So, at desire, it will be possible also credit to take.
And if nevertheless organization will decide to neglect reasons in favour of statement of object on balance of owner of leasing, it can take advantage of advantages of accelerated amortization and other economic gains. In general, is what to compare and from what to choose.

Uneasy VAT

As is known, piously place is empty does not happen, and there where it is possible to receive benefits under tax to property or profit tax, it is possible "to fly by" easily also from VAT. If object of real estate has been put into operation for a long time difference between its balance and market cost can be great enough, as results, actually, in growth of tax to added cost. If at you not one, and some leasing transactions on similar objects big VAT all same will not allow to take pleasure to full in economy due to accelerated amortization.
I shall add also, that VAT "will get out" at you of general picture and at acceptance of property on balance of leasing company. A problem in disputes on how it is possible to accept value-added tax to a deduction. Collisions between enterprises and tax specialists yet have not led to general right answer. Judge. position of supervising bodies is reduced to that while property is not accepted on balance, to count VAT on leasing payments it is impossible. In general, suggest to wait, years so 10-15. Certainly, businessmen do not agree similar conditions as on this question many actions of proceeding already have been won. In fact current leasing payments cover a part of a project cost of real estate, intended under transaction to purchase. Conditionally this process in connection with VAT can be compared to stage-by-stage purchase. So addressee of leasing has all opportunities to count VAT in time, instead of with delay in 10 years.




  Source: Info Cash Loan (22.12.2006)