Sale-and-leaseback plans are financial transactions in which a homeowner sells their home to another individual, an organization, or the bank and is then guaranteed a life-term lease to remain on that property until they pass or voluntarily move. Doing this removes the home from the client’s assets, thus easing the burden of taxes. This raises money for the homeowner, who after the sale pays rent to the new owner.
It is important to keep in mind with sale-and-leaseback plans that it is possible for the rent rate to change. Additionally, the new owners may not take care of the property to the same standards of the tenant.
In addition to real estate, sale-and-leaseback plans may be used for large assets such as planes or automobiles.