lease

This topic has 6 replies, 2 voices, and was last updated 5 years ago by MikeLittle.

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January 18, 2017 at 10:06 am #368130
firelion28
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hi mike,

can u pls tell me what you mean by a lease , a financial lease and an operation lease. Also what is an owner occupied property
January 18, 2017 at 10:25 am #368137
MikeLittle
Keymaster
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Hmm, it would help for you to get the expressions right!

They are respectively known as ‘finance lease’ and ‘operating lease’

A finance lease is one where substantially the whole of the risks and rewards of ownership of an asset are transferred by one person (the lessor) to another (the lessee)

An operating lease is any lease that isn’t a finance lease

These definitions are from the International Accounting Standard on the subject of leases IAS 17

Owner occupied property? Do you own any property? Yes? Do you live at that property? Yes? Then that property is owner occupied

Do you own any property? Yes? Do you live at that property? No? Does someone else live at that property? Yes? Then that property is NOT owner occupied

OK?
January 18, 2017 at 1:42 pm #368173
firelion28
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thanks mike

what do u mean by- Investment property may be owned or held under a finance lease?
January 18, 2017 at 1:45 pm #368174
firelion28
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is it meant for the lessor or lessee
January 18, 2017 at 7:54 pm #368230
MikeLittle
Keymaster
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For the lessee

If I owned a property and leased it to you, what are you going to do with it?

You may become an occupier (a tenant) or you could sub-lease the property to some third party friend

In that latter situation, you are the lessee of a finance lease and you are, following the subsequent agreement with your friend, a lessor

But you don’t even have to lease it out to your friend

Get hold of the property from me under a finance lease (for the whole or substantially the whole of the life of the property) and hold it for its capital appreciation or its stream of income (as an investment property)

OK?
January 19, 2017 at 9:22 am #368283
firelion28
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thanks a ton mike!
January 19, 2017 at 10:17 am #368295
MikeLittle
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You’re welcome
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