What is an advantage of leasing commercial real estate instead of purchasing?

Leasing commercial real estate offers several advantages, one of which is that monthly rent can often be treated as a tax deduction as a business expense. This means that the amount spent on leasing the property can reduce the taxable income of the business, providing a financial benefit. This aspect makes leasing an appealing option for businesses looking to optimize their cash flow and tax situation.

In contrast, purchasing property typically involves significant upfront costs, including down payments and closing fees, which can be a barrier for many businesses. While owning property means building equity over time, leasing does not confer ownership, and therefore the advantage of equity is tied to purchasing real estate rather than leasing.

Moreover, while the potential tax advantages of ownership exist, they often relate to depreciation and property-related expenses rather than the straightforward deduction received through leasing. Therefore, the tax benefits associated with leasing make it an attractive option for businesses that prefer to manage cash resources more flexibly without committing to long-term ownership responsibilities.