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What İs "sell And Rent Back" ?

What İs "sell And Rent Back" ?

Sale-and-leaseback is a financial transaction where a company sells property or machinery it owns to a leasing company and leases it back.


Companies short of operating capital may liquidate their balance sheets by receiving the sale price in cash from the leasing company and channel to their business the funds thus made available. Repayments to the leasing company will be in the form of lease payments spread over the long-term. In transactions involving property, the title deed fee to be charged in the beginning of the transaction when the property is being purchased by a leasing company is set at 4.55‰. (In non-sale-and-leaseback property transactions, title deed fee at the rate of 40‰ is paid by the leasing company upon both the purchase and the transfer to the lessee.)

No title deed fee will be paid in property transactions upon transfer to the lessee at the end of the term.

Property tax exemptions in sale-and-leaseback transactions

Corporate tax exemption

All revenues (100%) earned by the sale (sale-and-leaseback) of property to leasing companies and by the resale by the asset leasing or financial leasing companies to the organization from which the property had been taken over shall be exempt from corporate tax without the requirement for being held as assets for at least two full years.

The following conditions need to be satisfied in order for a transaction to be 100% exempt from corporate tax:

  • A lease contract in compliance with the Lease Law No: 6361 must be present;
  • The transaction must be sold to the leasing companies for the purpose of leaseback and on the condition that it will be taken back upon the expiration of the contract in compliance with the aforementioned law;
  • The equipment which is the subject of the contract must be an immovable piece of property.
  • The sale value must be collected by the end of the second calendar year following the year when the sale took place;
  • The revenue from the sale must be kept as a liability in a special account until the end of the fifth year following the year when the sale took place;
  • The revenue from the sale must not be used to supplement the capital for five years.
  • This exemption is not applicable to organizations engaged in the trade and rental of securities and immovable property.

Value-added tax (VAT) exemption

Provided that the ownership of the leased immovable property be transferred back to the tenant at the end of the contract term,

  • The sale of the leased immovable property to the lessee,
  • Its rental to the persons who have sold it,
  • The transfer of its ownership,

are exempt from value-added tax, this being applicable to immovable property which has been purchased by leasing companies from the lessee in person and leased back to them.

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