true lease definition

true lease

Multi-year lease arrangement in which the risks and rewards of ownership are retained by the owner (the lessor) of the leased asset or property, whereas the tenant or lessee retains its possession and use for the lease period. The lessor claims the depreciation benefits and the lessee claims the lease payments as capital expense. Called 'true' because they pass the accounting requirements for the lessor to claim the tax benefits, such leases offer comparatively lower lease payment or rent. An operating lease is a true lease whereas a capital lease is not. Also called tax lease or tax-oriented Lease.

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