Lease Incentives: Should I take it as a fit out or rental reduction?
We’re negotiating our new office and discussing fit out etc. The landlord is giving an incentive amount of $115,000 over 5 years. So we can either take this in rental reductions or a combination of rental reductions and fitout.
I’m wondering whether we should take a combo of rental reductions and fit out or pay for the fitout ourselves (i.e. $30,000 to $80,00) and get the incentive in 100% rental reductions. I figured if we pay for the fitout then we could claim perhaps depreciation etc.
Riz, we’re at the pointy end of negotiations. A quick response would be very helpful in securing this deal. I look forward to hearing from you.
Great question - from a tax perspective it all boils down to this …
Which strategy gives you most tax savings soonest?
Here's my take based on the info provided:
So boiling it down the pro’s and con’s can be measured again 3 key measures. Tax deductibility, Current Cashflow and Ongoing Cashflow.