October 06, 2016 23:03

What is the redemption payments .

To understand what is meant by "redemption payments", it is necessary to refer to the term "leasing", to understand its meaning.Lease payment - the total amount paid in the end of the leasing recipient before it lessor leasing services for the right to use the property.Lease payments are carried out by individual contributions.At the end of the contract the recipient has the option to buy out the lease object in full ownership, if it is written in the contract.Payments can be performed either in cash or in the form of a product or provision of services to the lessor in mixed form.

leasing recipient at the signing of the agreement takes into long-term lease property needed for his business.At the same time he acquires the right to tax benefits and the redemption is received property at a bargain price.The contract will then be shown the amount of redemption payment.

Contracts of leasing companies by mutual agreement between both parties can be given one of the methods for determining the r
edemption price of the object of leasing:
  • Method "fixed payment" - the final amount of redemption payment is not available, it is distributed in the form of individual leasingpayments in equal parts for the entire time period of the contract.
  • method "to advance" - the recipient of leasing to the lessor shall pay an advance, the amount of the advance is determined by agreement parties to the contract, the remaining amount of redemption payment in equal installments distributed over the duration of the leasing contract, similar to the method of "fixed payment".
  • method of "minimum payments" - in the final payment amount includes the cost of the depreciation of the object of leasing for the time of the contract, compensation for the use of borrowed funds of the lessor, the Commission, payment of support services, which helped the lessor, the value of property given away for use, if it is registeredin the contract in the event of his redemption.All of these calculated values ​​are summed to give a total amount of redemption payment, which is then distributed over the entire time period of the contract.

Frequency of payment of payment prescribed in the contract.They are subject to an annual, quarterly, monthly, weekly or on certain days of the month the contract.

final amount of redemption payment - this is not a lease payment specified in the contract for the period of time the use of the leased property, it is the final amount to be paid by the lessee at registration of the property in its full ownership.

If the contract period is over, the Lessee may purchase the property taken on the balance of its value.The new contract for the sale of the property redeemed will be signed by the lessee and the lessor.

Final redemption value may not appear in the contract when the lease payments are included in the redemption payments for the duration of the contract time.Payments are taken into account are taxed.Leased property automatically becomes the property of the Lessee at repayment of all sum of leasing payments.The tax authorities always control the cost of the transaction, if payment of the price too low, use the right to recalculate the tax liability of participants of leasing.