Rental or leasing expenses are considered operating expenses and are therefore tax deductible. Since investors treat long-term leasing contracts as debt, it could be difficult for a company to access capital markets and borrow more or other forms of market debt. The main advantage of a lease is stability. As a landlord, you have a legally binding document that guarantees that you have rental income for a set period of time. If your tenant has to move before the end of the lease, they remain responsible for the rent for the rest of the rental period, unless another tenant can be found to take care of that remaining period. Homeowners often prefer to sign long-term leases to reduce the cost of revenue and avoid empty spaces. Since rental rents are considered yield charges for the determination of taxable profits, this is advantageous for the lessee to minimize tax obligations. In addition, the lessor, which is generally in the top tax bracket, passes on the benefit of the depreciation benefit in the form of reduced leasing payments to the lessee. The main advantage of leasing is that cash outflows or lease-related payments are spread over several years, avoiding the burden of a large non-recurring cash payment. This helps a company maintain a stable cash flow profile.

The tenant can also ensure that rental rents are adjusted to reduce their tax debt and thus help them plan for tax. The purpose of choosing a lease can be varied. . . .