About Title Transfer
The title transfer is stated within the lease if the title to the asset will transfer ownership at the end of the term. A title transfer is when the lessee obtains the title of the asset at the end of the lease or once all the payments have been made. Transfer of ownership occurs by the end of the lease term.
This is commonly seen in equipment or vehicle leases when the lessor relinquishes the title to the asset and ownership of the asset transfers to the lessee at the end of the lease term. If the title transfers to the lessee, then the lease is classified as finance.
How Title Transfer Works in LeaseGuru
If the title to the asset will transfer ownership at the end of the term, then you can mark this on your lease during lease entry or by amending the lease.
- Select “Add Lease” from the LeaseGuru Dashboard
- Complete lease entry as normal.
- On the “Options” tab where it says “Title transfer at lease end?”, click the toggle to mark this as “YES”. (Note: If not selected, this will default to “No”.)
The only effect title transfers will have on the financials is how the lease is depreciated. If the lease term is shorter than the useful life, the asset will depreciate based on the life of the lease, rather than the lease term.