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Can a lease to buy property be an asset?

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Hello all, 

The company I'm doing accounts for are looking into doing a lease to buy on a property which would be used for our everyday services (they are a supported housing service). The lease is for 2-5 years, with an option to buy after 2 years and have to buy after the 5 year term. The lease payments made will be deducted off the price of the property. Can this be classed as an asset on the accounts?

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Hallerud at Easter
30th Jun 2020 10:14

Sums paid in advance - Debtors over one year seems the most logical place to post these payments, subject of course to checking the contract.

Presume there is a concluded contract in place which states when ownership transfers (at the 2 year or 5 year trigger?) accordingly unless this contract passes ownership upon execution of said contract(which I doubt) it is, imho, not competent to recognise the actual property asset in the accounts at that stage

The key is to read the contract.

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By johnt27
30th Jun 2020 11:37

Depending on the contract terms and directors intentions I think you could classify as an asset from the outset but without the detail this is by no means concrete.

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