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The term "sale and lease back" explains a circumstance in which an individual, typically a corporation, owning service residential or commercial property, either real or individual, sells their or commercial property with the understanding that the buyer of the residential or commercial property will immediately reverse and lease the residential or commercial property back to the seller. The objective of this kind of transaction is to allow the seller to rid himself of a big non-liquid investment without depriving himself of the usage (during the regard to the lease) of required or desirable structures or equipment, while making the net money profits offered for other investments without resorting to increased financial obligation. A sale-leaseback deal has the additional benefit of increasing the taxpayers readily available tax deductions, since the rentals paid are typically set at 100 percent of the worth of the residential or commercial property plus interest over the term of the payments, which leads to a permissible reduction for the worth of land as well as buildings over a period which may be shorter than the life of the residential or commercial property and in specific cases, a deduction of a regular loss on the sale of the residential or commercial property.
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What is a tax-deferred exchange?

A tax-deferred exchange allows an Investor to sell his existing residential or commercial property (given up residential or commercial property) and buy more rewarding and/or productive residential or commercial property (like-kind replacement residential or commercial property) while delaying Federal, and in the majority of cases state, capital gain and devaluation regain earnings tax liabilities. This transaction is most frequently referred to as a 1031 exchange but is also referred to 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 postpone all of their Federal, and most of the times state, capital gain and depreciation regain income tax liability on the sale of investment residential or commercial property so long as specific requirements are met. Typically, the Investor should (1) establish a contractual arrangement with an entity described as a "Qualified Intermediary" to facilitate the exchange and appoint into the sale and purchase contracts for the residential or commercial properties consisted of in the exchange