It is a lease arrangement that brings tax benefits to the lessor and lessee both. In this, the lessor borrows (full or partial) money to purchase an asset, and then lease that asset to the lessee. To know more about it, click on the link given below: https://efinancemanagement.com/sources-of-finance/leveraged-lease-meaning-features-example-and-more

1. By:-
eFinanceManagement.com
https://efinancemanagement.com/sources-of-finance/leveraged-lease-meaning-features-
example-and-more
Leveraged Lease

2. 1. Meaning
2. Parties to the Lease
3. Tax Benefits to the Parties
4. Features
5. Leveraged Leasing vs Leveraged Financing vs Operating Leasing
6. Reference
Content

3. It is a lease arrangement that brings tax benefits to the lessor and lessee both. In this, the lessor borrows (full or partial)
money to purchase an asset, and then lease that asset to the lessee. Depending upon the type of lease arrangement, the
ownership of the asset still remains with the lessor or the lease provider.
Meaning

4. This type of lease involves three parties –
1. The lessor
2. Lessee
3. The lender
Parties to the Lease

5. • The lessor can use depreciation on the asset to lower his or her taxable income.
• Interest payment to the lender is deductible from the income of the lessor.
• The lessee can reduce the taxable income by deducting regular lease payments.
Tax Benefits to the Parties

6. • The lender has no recourse to the lessor.
• Depending on the terms of the agreement, the title/ownership of the asset can remain either with the Lender or
Lessor.
• The lessor doesn’t have the responsibility to make payment to the lender because the lessee makes the payment directly
to the lender.
• Lessor usually invests only a small portion (or nothing at all) of the asset price.
• The lender has more say than the lessor in the situation of sale or resale of the asset.
• Lessor also gets tax benefits.
• The debt to the lessor is usually of non-recourse nature.
Features

7. 1. Number of Parties: Leveraged leasing involves three parties – The lender, Lessor, and the Lessee. Whereas, in the
leveraged financing and operating lease, there are only two parties – the lessor and the lessee.
2. In leveraged leasing, the responsibility for payment rests with the lessee to the lender. In leveraged financing and
operating lease, the responsibility is with the lessee to the lessor.
3. Lender enjoys right on the asset under leveraged leasing, but in the leveraged leasing and operating leasing, the lessor
has the right on the asset.
4. Unlike leveraged leasing, the structure and process of leveraged financing and operating leasing is simple and
straightforward.
5. In leveraged leasing, the lessor invests some money and borrows the remaining. In leveraged financing and operating
leasing, the lessor manages 100% of the funds.
Leveraged Leasing vs Leveraged Financing vs
Operating Leasing

8. Reference
To know more about it, click on the link given below:
https://efinancemanagement.com/sources-of-finance/leveraged-lease-meaning-features-example-and-more