RE:RE:RE:RE:RE:RE:RE:time for AF and team to get SERIOUSClarence wrote: Does renting not provide for greater tax right offs and thus reduce current costs?
An old tax professor of mine once told me that argument should never be taken at face value.
It's a straightforward financial transaction. You have to compare the PV of the after-tax cost streams for the two options. Whichever is less is the winner, and that factors in the resale value of the property asset in the case of the building purchase. IMO, current and future rent values would have to be awfully cheap for that option to win out,
Most people forget that with the purchase option, you get to write off the interest on the financed amount plus depreciation on the cost of the property, as well as on leasehold improvements, i.e. the inside partitions, electric and network infrastructure, etc...which is also true with the leasing option. Problem is, you can't take those with you and the rentor isn't likely to compensate you for them when your lease is up. If you're selling the building, you can probably also recover a portion of those costs as well.
The building they purchased is also built for growth with three times the florr space theiy had under lease at the time they made the purchse.
If they're getting all that for less than their leasing cost at the time, which is what the NR basically said, that deal was a not brainer and I really don't understand all the fuss some people made and still make over it.