The financial leasing is an institute of Anglo-Saxons origin, according to which a leasing company (lessor) purchases from third party suppliers the ownership of certain property and then granted another party (user) the use of it, for a certain period and upon a continuing periodic payment.

The aim of the operation is to satisfy the companies’ needs of having the essential goods for their activities, without fixing assets.

Thanks to an advantageous tax system – that allows a twelve years rental deduction from business and private income – the financial leasing has consolidated its position also in the field of real estates. In relation to those goods, the most used mode is certainly the translation leasing, i.e. a contract in which the user’s willingness to acquire the ownership of the asset is expected ab origine and the duration of the contract is predetermined on the basis of the further transfer and the rescheduling of the purchase price. In this case, the contract refers to goods which continues to have, over the agreement’s expiry date, a residual value higher than the amount agreed for the option and the agreed fees take into account both the remuneration for the lender’s activities and the price of the good – in fact they also have the function of serving a part of the price in anticipation of the next purchase.

The translation leasing is not a trilateral agreement, but it is a case of connection between two related agreements: the purchase agreement (between the supplier and the lessor) and the financial leasing (between the lessor and the lessee). This connection is characterized by an overall financial cause.

Recently, maybe because of the recent crisis, the private autonomy has explored new frontiers of “financing”, avoiding to involve specialized agencies and banks. The rent to buy agreement, for example, provides for the delivery of the property from the owner upon payment of a periodic fee and an option right for the subsequent purchase in favour of the lessee.

The legislator – aware of the evolution of times – with the new Stability Law has introduced an institute aimed to facilitate the principal residence purchase, providing the possibility of using leasing as an alternative to the traditional mortgage loan.

The art. 1, paragraph 76, of the Stability Law defines the “finance lease agreement of a property to be used as a principal residence” like a contract thorough which “a bank or a financial intermediary enrolled in the register provided for by article 106 TUB (…), undertakes to purchase or to build a property according to the instructions of the lessee, who bears all risks connected to it, included the one of deterioration, and makes it available for a certain period and upon payment of a certain amount that includes both the purchase or construction price and the duration of the contract. Upon the agreement’s expiry date, the lessee has the option to acquire the ownership of the property at a pre-fixed price”.

In summary, on one side the legislator has “typified” the lease agreement for acquiring principal residence, on the other side he has encouraged the use of this institute by providing several benefits, especially in the tax field.

Indeed, paragraph 82 of the abovementioned article recognises the lessee’s right to benefit from tax deduction – to the extent of 19% and under the same conditions provided for tax deduction of mortgage interest – of the following costs for the purposes of personal income tax:

a) if the costs are supported by subjects under the age of 35, who have total income not higher than Euro 55.000 at the time of drafting of finance leasing, and who do not hold property rights on principal residence:

1. of the leasing fee and the related additional expenses, for an amount not higher than Euro 8.000;
2. of the purchase price of the property when the option is exercised, for an amount not higher than Euro 20.000;

 

b) if the costs are supported by subjects who are 35 years of age or older, who have total income not higher than Euro 55.000 at the time of drafting of finance leasing, and who do not hold property rights on principal residence:

1. of the leasing fee and the related additional expenses, for an amount not higher than Euro 4.000;
2. of the purchase price of the property when the option is exercised, for an amount not higher than Euro 10.000.

 

The tax advantage is evident, especially when compared to the tax system related to traditional mortgage loan, which allows the tax deduction solely of the interests expense and with a maximum limit of Euro 4.000. However, the most important feature is the greater relief for the subjects under the age of 35, who will benefit from tax deduction on a limit that are twice as high as the traditional mortgage’s limit and from another tax deduction for the purposes of the final “maxi-instalment”.

In addiction, the contract nature itself includes some additional economic advantages, such as the fact that it is no necessary to establish any mortgage – consequently avoiding also the related costs. In fact, the warranty function is carried out by the fact that the ownership of the property is retained by the lessor until the lessee exercises his option right.

Moreover, the leasing enabled the lessee to achieve a financing – freely adapting in relation to the agreement duration and to the periodic payment amount – which is able to cover the entire cost of the property.

Furthermore, pursuant to paragraphs 79 and 80 the lessee can use – without any fees or examination expenses or request for additional guarantees – the periodic payment suspension mechanism, which consists in the interruption of the payment, just for once and for a maximum period of twelve months. This will only be possible once the lessee will be in a difficult situations arising from the termination of the employment or the cessation of agency relationships, of commercial representation or of another collaborative relationships which consists in coordinated and continuous services (which is not connected to consensual resolution, lawful dismissal for misconduct, for justified reason or employee’s resignation outside of the lawful dismissal area).

In conclusion, the bases for an attractive alternative to the traditional mortgage loan have been foreseen, even if the greatest criticalities remaining devolved to the practice. For example, the leasing duration, which today is generally fixed around 12-15 years – with the consequence that the periodic payment could be more expensive than the mortgage loan’s one – will be determinant for the success of the new institute.

Moreover, the risk reversal explicitly provided for by paragraph 76 – notwithstanding the provision under art. 1526, paragraph 3, of the Italian Civil Code – may be a daunting element, although consistent with the institution’s ratio.