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  • Sale & Leaseback Agreements

    It is not uncommon for property owners to dispose of a property to a third party yet subsequently lease the property back off them. This is usually seen as part of a corporate sale and acquisition, or may simply be a ‘one-off’ as part of an estate planning strategy or otherwise. Whatever the case may be, we are naturally dealing with the disposal of a property, in which case ‘normal’ tax rules apply and capital gains tax and stamp duty land tax would be due at some stage of the transaction. Thankfully, structuring the transaction properly can result in the fact that sale and leaseback agreements may mean you can release cash that is tied up in your assets without unforeseen tax charges.

    Release cash

    Structuring a sale and leaseback agreement over a property correctly may result in a cash windfall.

    Grow your business

    Often, a property may form the bulk of the value of a business. You may feasibly dispose of the property yet still retain occupation rights.

    Save tax

    Sale and leaseback agreements are more common that you might think, but there are tax advantages which may be missed and therefore not claimed. Involving us early may save you money.

    How can we help?

    A sale and leaseback agreement is where a business looks to sell a building it both owns and occupies, while entering into a lease agreement with a buyer of the building. In other words, the owner sells the property to a property investor, who immediately becomes his landlord.

    A sale and leaseback can be beneficial for both the buyer and seller alike, as the seller is able to receive a lump sum of cash quickly, and the buyer acquires a lower-than-market value purchase price, along with a long-term lease at an attractive yield. But, like most things in life, there are several advantages and disadvantages of a sale and leaseback. 

    Sale and leasebacks are usually an alternative to standard bank financing as they allow the owner/occupier of the property to free up capital that has been invested in real estate, and use the monies raised toward other more profitable and immediate uses.

    There are several advantages and disadvantages of sale and leaseback deals as a result, each pro and con should be considered carefully, to ensure you are making the correct decision for your business and commercial property.

    With a myriad of tax legislation surrounding this point, by speaking to an expert prior to your considering a sale and leaseback arrangement in order to ensure that any reliefs are taken into account and also that you are fully aware of the pros and cons of undertaking such a transaction, giving you an informed view of your position and aiding your decision making process. 

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    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

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