The term "sale and lease back" describes a situation in which a person, generally a corporation, owning company residential or commercial property, either genuine or personal, sells their residential or commercial property with the understanding that the purchaser of the residential or commercial property will right away reverse and lease the residential or commercial property back to the seller. The goal of this type of deal is to make it possible for the seller to rid himself of a big non-liquid investment without depriving himself of the usage (throughout the regard to the lease) of required or preferable structures or devices, while making the net cash profits offered for other financial investments without turning to increased debt. A sale-leaseback transaction has the fringe benefit of increasing the taxpayers available tax reductions, due to the fact that the leasings paid are usually set at 100 percent of the worth of the residential or commercial property plus interest over the regard to the payments, which leads to a permissible reduction for the worth of land in addition to structures over a period which may be shorter than the life of the residential or commercial property and in particular cases, a reduction of a common loss on the sale of the residential or commercial property.

What is a tax-deferred exchange?
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A tax-deferred exchange permits an Investor to offer his existing residential or commercial property (given up residential or commercial property) and acquire more successful and/or productive residential or commercial property (like-kind replacement residential or commercial property) while deferring Federal, and in many cases state, capital gain and depreciation recapture earnings tax liabilities. This deal is most frequently described as a 1031 exchange however is also known as a "delayed exchange", "tax-deferred exchange", "starker exchange", and/or a "like-kind exchange". Technically speaking, it is a tax-deferred, like-kind exchange pursuant to Section 1031 of the Internal Revenue Code and Section 1.1031 of the Department of the Treasury Regulations.

Utilizing a tax-deferred exchange, Investors might delay all of their Federal, and most of the times state, capital gain and devaluation regain earnings tax liability on the sale of investment residential or commercial property so long as certain requirements are satisfied. Typically, the Investor needs to (1) develop a contractual plan with an entity described as a "Qualified Intermediary" to facilitate the exchange and appoint into the sale and purchase agreements for the residential or commercial properties consisted of in the exchange