Finance Lease
Property Tax and Insurance
The responsibility for property taxes and insurance are with the lessee. Because of financing requirements, the lessee is responsible for any damage to the sign and is responsible to pay all property taxes.
Guaranteed Residual Payment
At the conclusion of the lease term, the lessee is responsible for an “end-of-lease guaranteed residual” payment. This payment is similar to a balloon payment on a loan and can be used to tailor the lease payments for cash flow and working capital purposes.
Tax and Accounting Treatment
A finance lease is handled as a purchase, with accounting and tax rules for depreciation and loan amortization.