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Every Small Business, at some point, is faced with the dilemma of whether to lease or buy their location. "Should I lease or Buy?", "What are the advantages and disadvantages of each?"
Most business owners facing this dilemma for the first time find this endeavor as intimidating and overwhelming as it is for a first-time home buyer. We, at SoCal CDC, expect that the discussion below will provide you with some useful points and make your decision easier.
A Certified Development Corporation
Buy vs Lease Comparison
|BUY VS LEASE COMPARISON|
|Debt Reduction and Equity Build-up||Initial capital outlay||Mobility|| Loss of appreciation |
|Interest on the mortgage loan is tax deductible||Property values may decline||Tax deduction as business expense||Contractual penalties|
|You can take annual depreciation deductions on taxes||Holding period of more than 5 years||No loss of owning in a bad market||Loss of Improvement value|
|No rent increases||Financing|| Freedom to sublet if necessary to move||Lack of Control|
|Control||No equity build up |
|Income||Abandon location at lease termination|