The most classic equipment leasing option available, an operating lease (or true lease) structures the lease agreement to provide 100% tax deductibility on lease payments as a capital expense. The leased equipment is classified as a rental, allowing the lessee to transfer obligation of the equipment to the lessor at the end of the term.
Capital Lease
The optimal choice for long-term equipment plans and intended eventual ownership, a capital lease (similar to a finance lease) classifies equipment as being owned by the lessee, allowing the lessee to claim tax deductions on the equipment depreciation. A capital lease usually provides a more attractive purchase incentive at the end of the lease term.
Definitions
Lessee - A person who leases a property from its owner. also called tenant Lessor - An owner of property who rents it to another party, called a tenant. also called landlord.
