Commercial Lease Buyout Calculator
Estimate the cost of buying out a commercial lease early. Calculate remaining rent obligation and unamortized costs.
Landlord's remaining TI and leasing commission costs
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Frequently Asked Questions
How is the discount rate determined?
The discount rate reflects the risk and time value of money. It is often tied to the propertys Cap Rate or the landlords cost of capital (6-10% is common).
Is a lease buyout taxable income?
Yes. For the tenant receiving payment, it is generally treated as capital gain (sale of leasehold interest) or ordinary income depending on structure. Consult a CPA.
Who typically initiates a buyout?
Either party. A landlord might want to redevelop the building or sign a higher-paying tenant. A tenant might want to downsize or close a location.
What is a "valid" reason for a landlord buyout?
Redevelopment, selling the building unencumbered, or replacing a struggling tenant with a credit tenant at a higher rate.
How does remaining lease term affect price?
The longer the remaining term and higher the rent spread (vs market), the more expensive the buyout will be.