Sale Leaseback
What Is a Sale Leaseback?
A sale leaseback is a transaction in which a property owner sells an asset and then leases it back from the buyer.
This arrangement allows the original owner to access cash from the sale while continuing to use the asset.
Sale leasebacks are common in commercial real estate and business equipment financing.
Why It Matters
Sale leaseback:
- Converts property equity into liquidity
- Maintains operational use of asset
- Transfers ownership risk
However, the seller becomes a tenant and must pay ongoing lease payments.
Long-term lease obligations should be carefully evaluated.
How Sale Leaseback Works
Sale leaseback transfers ownership of an asset to a buyer in exchange for cash proceeds.
The original owner signs a lease agreement to continue occupying or using the property.
Lease terms define rent, duration, and renewal options.
Sale Leaseback vs. Refinancing
Sale Leaseback → Ownership transfers to buyer
Refinancing → Ownership remains with borrower
Equity extraction occurs differently.
FAQs About Sale Leasebacks
Are sale leasebacks only for businesses?
They are common in commercial settings but may apply in residential scenarios.
Does the seller lose control?
The seller no longer owns the asset but retains usage rights under lease terms.
Are lease payments tax-deductible?
In business contexts, lease payments may be deductible depending on tax rules.
Related Terms
