Rent Expense Add-back

January 18, 2025
by a searcher from George Washington University in Atmore, AL 36502, USA
Is rental expense a legitimate add-back if the deal includes the real estate? I can see where the seller is coming from. However, I'm conflicted. If the business ever moves to a leased property, this becomes a large expense.
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
However, if you are buying the real estate, then rent can be added back. You are looking at the transaction as it is at that point in time. Now if you plan to move the business because you know the space is too small, you can always try to get the seller to keep the real estate and lease it back. In that case you would add-back the rent and then remove whatever new rent the seller is looking for if there is a difference. If no difference, then you would not add the rent back. I hope this helps to clarify. If you have additional questions you can reach me here or directly at redacted Depending on the type of financing you are using, there can be some beneficial financing strategies to including the real estate in the loan, and some options to lease it with an option to buy it later, and then finance it later. Good luck.
from Wake Forest University in Winston-Salem, NC, USA