Free investor tool
Commercial lease versus buy calculator
For business owners deciding whether to keep leasing or buy their premises: compare the cost of each over the years you choose, after allowing for the equity you would build.
Updated · Free, no sign-up
| After | Leasing | Buying | Ahead |
|---|---|---|---|
| 1 years | $55,560 | $117,558 | Leasing by $61,998 |
| 3 years | $169,917 | $175,978 | Leasing by $6,061 |
| 5 years | $288,480 | $221,679 | Buying by $66,801 |
| 7 years | $411,063 | $253,146 | Buying by $157,917 |
| 10 years | $601,879 | $269,814 | Buying by $332,064 |
How it works
Leasing against owning your premises
Leasing keeps your capital free for the business and costs only the rent, which usually rises each year. Buying ties up a deposit and buying costs and adds loan repayments and ownership costs, but you build equity as the loan falls and if the property grows in value, and you control the premises.
The calculator compares the net cost of each path. For leasing, it is the rent paid, less what your deposit could have earned elsewhere. For buying, it is every dollar paid, less the equity you hold at the end. It is before tax: rent and loan interest are generally both deductible for a business, and GST, depreciation and the structure you buy in (including a self-managed super fund) all change the result, so take the numbers to your accountant.
The numbers are one part of the decision
We look at the figures alongside growth drivers, vacancy, supply and how a property fits your borrowing and portfolio plans, then choose the market that suits your strategy, wherever it is in Australia. See how we buy investment property.
FAQ
Common questions
Is it better to lease or buy business premises?
It depends on how long you will stay, what your capital earns inside the business, and the property's growth. Buying tends to win over long periods in premises that suit the business; leasing tends to win when the business may move or grow, or when capital earns more in the business than in property.
Can my self-managed super fund buy my business premises?
Yes, in many cases. Business real property is one of the few assets a self-managed super fund may buy from a member or related party, at market value, and lease back to the member's business at market rent. The rules are strict, so get advice from your SMSF accountant or adviser first.
Does the comparison include tax?
No. It is before tax. Rent, loan interest, ownership costs and building depreciation are generally deductible for a business, and GST may apply to the purchase. Your accountant can put after-tax figures on both paths.
Is this financial advice?
No. It is a general estimate to help you compare options. It does not consider your personal circumstances, and results depend on the figures you enter. Check them with your accountant, mortgage broker or financial adviser before you act.
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