What types of entities qualify for a municipal or tax-exempt lease?

For the lease to qualify for the interest exclusion, a lessee under a tax-exempt lease must be a state or possession of the U.S., the District of Columbia, or a political subdivision thereof. This may include state entities such as school districts, special purpose districts (fire, parks, utility, water, etc.), hospitals, agencies, authorities, boards and commissions. To be qualified, a governmental entity must possess one of three characteristics of a government, the power of eminent domain, police power, or the power to levy taxes.

The fact that an agency is financially supported by government funds or is "tax-exempt" does not always ensure qualification. Additionally, some provisions within the tax code allow organizations that provide essential services on behalf of political subdivisions, such as Volunteer Fire Departments, rescue squads, EMS, etc., to issue tax-exempt debt with limitations.

Related FAQs

• What Are The Financial Process – Basic Steps?

  The Basic Steps of the Financial Process are: Obtain quote for equipment from qualified vendor Credit...

• What is a municipal or tax-exempt lease?

  A municipal or tax-exempt lease agreement allows a political subdivision to use its annual...

• What can be financed on a tax-exempt basis?

  Any personal property equipment or real property essential to the operations of the...

• What factors should be considered in deciding whether or not to use a tax-exempt lease?

  When acquiring financing for any asset acquisition decision, the principal financial objective is...

• How Do I Obtain a Quote?

  For a detailed quote, please call Sparta Commercial Services, Inc. on our toll-free line: +1 (800)...

• Who owns the equipment under a tax-exempt municipal lease and how is the equipment titled?

  Title may either be retained by the lessor until all payments have been received or may be granted to the...

• What types of entities qualify for a municipal or tax-exempt lease?

  For the lease to qualify for the interest exclusion, a lessee under a tax-exempt lease must be a...

• Is leasing easy?

  We take great pride in ensuring your leasing experience is easy.  Lease purchasing is much easier...

• What is a non-appropriation clause and why is it needed?

  With a lease-purchase Agreement, a non-appropriation clause enables the lessee to account for the...

• Why lease the equipment?

  Tax-exempt leasing is one of the simplest and most successful ways to purchase essential equipment and...

• Prev
• Next