Industrial Real Estate Tool · Free
Sale-Leaseback Calculator
Your building holds millions in equity your business can't use. Sell it to an investor, stay as the tenant, and put the cash to work — but only if the cash costs less than you can earn with it. Enter your numbers to see the price, the tax, the cash released, and what that money really costs.
The leaseback
NNN. Investors expect about market rent — an above-market rent lowers your real price.
Sets the price: rent ÷ cap rate. Weaker credit and shorter terms push it up.
What you own today
Purchase price plus improvements.
From your tax return or CPA.
Check for defeasance or yield maintenance.
Keeping it vs. selling it
What you give up by selling.
Roof, paving, HVAC. Use 0 if the lease is absolute net and you still pay.
After tax. Equipment, inventory, acquisitions, paying down 9% debt.
Taxes
Federal max is 25%.
Federal 20% + 3.8% NIIT for many owners. Entity type matters.
Cash released at closing
$4,032,627
from a $8,444,444 sale ($140.74/SF at a 6.75% cap) leased back at $570,000 a year
The sale-leaseback comes out ahead
That cash effectively costs you 11.3% a year — what you give up in rent, after-tax, plus the building’s value at the end of the term. You’re assuming you can earn 12% on it, so over 10 years the leaseback is $203,375 better in today’s dollars.
Implied cost of the capital
11.3%
vs. your 12% return
Year-1 rent
$570,000
$9.50/SF · 14.8× rent = price
Tax at closing
$1,128,484
taxable gain $4,691,111
Total rent, 10 yrs
$6,534,411
before tax deduction
Where the sale proceeds go
| Sale price | $8,444,444 |
|---|---|
| Selling costs | -$253,333 |
| Mortgage payoff | -$3,000,000 |
| Prepayment penalty | -$30,000 |
| Capital gains + recapture tax | -$1,128,484 |
| Cash released | $4,032,627 |
Implied cost of capital: cap rate × building growth
The lower the number, the cheaper the cash. Compare it with the 12% you expect to earn.
| Investor cap ↓ / Growth → | 1.0%/yr | 3.0%/yr | 5.0%/yr |
|---|---|---|---|
| 6.25% | 8.5% | 10.5% | 12.4% |
| 6.75% | 9.4% | 11.3% | 13.2% |
| 7.25% | 10.3% | 12.2% | 14.1% |
| 7.75% | 11.2% | 13.1% | 15.0% |
Green: cheaper than your expected return. Amber: more expensive.
Rent vs. what ownership costs you now
| Year | Leaseback rent | Rent after tax | Owning, after tax | Extra cost of leaseback |
|---|---|---|---|---|
| 1 | $570,000 | $427,500 | $208,214 | $219,286 |
| 2 | $587,100 | $440,325 | $209,630 | $230,695 |
| 3 | $604,713 | $453,535 | $211,126 | $242,409 |
| 4 | $622,854 | $467,141 | $212,706 | $254,435 |
| 5 | $641,540 | $481,155 | $214,376 | $266,779 |
| 6 | $660,786 | $495,590 | $216,139 | $279,450 |
| 7 | $680,610 | $510,457 | $218,003 | $292,455 |
| 8 | $701,028 | $525,771 | $219,971 | $305,800 |
| 9 | $722,059 | $541,544 | $222,050 | $319,494 |
| 10 | $743,721 | $557,791 | $224,247 | $333,544 |
At the end of year 10, keeping the building would net about $7,279,956 after selling costs, loan payoff and tax — that is the last payment the leaseback “costs” in the cost-of-capital math.
Simplified model: flat tax rates, building depreciated over 39 years on 80% of cost, no state tax, no purchase or renewal options, and no value for the flexibility of owning. The lease will likely show up as a liability on your balance sheet. Confirm with your CPA and attorney, and get your lender’s payoff terms in writing.
Curious what investors would actually pay?
Email yourself this analysis. Ryan can tell you which sale-leaseback buyers are active in your market, what cap rate your lease and credit would command, and whether a 1031 makes sense. Confidential.
Submitting does not create a brokerage relationship. MaxLife Realty LLC · Ryan Solberg, FL Broker License #BK3354351.
Formulas Behind the Sale-Leaseback
The investor prices off the leaseback rent. The calculator then treats the deal as financing and finds the annual rate you are effectively paying for the cash released.
Sale Price = Year 1 Leaseback Rent ÷ Investor Cap RateTaxable Gain = Sale Price × (1 − Selling Cost %) − (Cost Basis − Accumulated Depreciation)Tax = min(Gain, Accumulated Depreciation) × Recapture Rate + remaining Gain × Gain RateCash Released = Net Sale Price − Loan Payoff − Prepay Penalty − Tax (tax is deferred if the 1031 toggle is on)Implied Cost of Capital = IRR of (+Cash Released, −(after-tax leaseback cost − after-tax cost of owning) each year, −net proceeds you would have had from keeping and selling)The tax rates are inputs you set. The defaults are 25% on the depreciation portion and 23.8% on the rest, which are a federal ceiling and a top-bracket assumption, so your own rates may be lower.
Worked Example: A 60,000 SF Owner-Occupied Building
Hypothetical numbers for illustration, not a quote or a forecast. The assumptions:
- →60,000 SF leased back at $9.50/SF NNN with 3% annual bumps, 10-year term; investor cap rate 6.75%
- →Cost basis $4,500,000, accumulated depreciation $1,000,000, loan payoff $3,000,000 at 5.50% with 18 years left, 1% prepay penalty, 3% selling costs
- →Keep-owning case: 3% annual appreciation and $0.15/SF reserves; 25% operating tax rate
- →Tax inputs: 25% on depreciation, 23.8% on remaining gain, no 1031 exchange; your alternative return on cash is 12%
Computed with this page's engine (runSaleLeaseback) using the default inputs. All inputs are illustrative. The result flips if your alternative return, the cap rate or the appreciation assumption changes, which is what the sensitivity grid above is for.
Inputs and Limits
Simplified taxes
Flat rates you enter: one for the depreciation portion, one for the remaining gain and one for operating deductions. No state tax, alternative minimum tax, installment sale, passive loss or entity-level detail. The keep-owning case assumes depreciation on 80% of cost over 39 years.
1031 toggle is a deferral shortcut
Turning on the 1031 option removes the tax from cash released and charges the same deferred tax at the end of the term. It does not test whether a particular exchange qualifies or model replacement-property timing.
No lease-accounting or credit analysis
Balance-sheet treatment, whether the transaction qualifies as a sale, covenants and the investor's underwriting of your credit are outside the tool. Ask your CPA and lender.
Whole-year term and fixed-rate loan
Term is rounded to whole years, and your existing loan is modeled as a single fixed-rate amortizing loan paid off at closing. Rent is NNN, with only the reserve input reflecting any capex you would stop paying.
Sources and As-Of Dates
- IRS Tax Topic 409, Capital gains and losses: most net capital gain is taxed at 0%, 15% or 20%; the unrecaptured section 1250 gain portion of a real property sale is taxed at a maximum rate of 25%. Page last reviewed September 24, 2026.
- IRS Tax Topic 559, Net Investment Income Tax: 3.8% on net investment income above modified AGI thresholds ($200,000 single, $250,000 married filing jointly); net gain from selling real estate is generally included. Page last reviewed September 24, 2026.
Sources last checked November 1, 2026. Rates shown are federal and apply to individuals. Entity type, state tax and your facts change the result. Not tax advice.
How to think about a sale-leaseback
An investor buys your building at leaseback rent ÷ cap rate. You keep operating in it, and pay that rent for the term. The sale releases your equity but costs you three things: the after-tax rent you now pay, the building’s future appreciation, and the tax bill (unless a 1031 defers it).
Instead of just showing profit, this calculator treats the deal as financing. It finds the implied cost of the capital — the annual rate you’re effectively paying for the cash — so you can compare it with what you’ll earn on it. The sensitivity grid shows how much of the answer rides on the investor’s cap rate and on how fast the building would have appreciated. If you’re also weighing a purchase, see the industrial lease vs. buy analysis; to price the building without a leaseback, use the industrial property value estimator.
Sale-leaseback FAQs
What is a sale-leaseback?
In a sale-leaseback, the owner of a building that it occupies sells it to an investor and signs a long-term lease to stay in the same space. The business converts a locked-up asset into cash without moving, and the investor gets a tenant already in place. Leases are commonly 10–20 years, usually triple-net, with fixed annual escalations and renewal options.
How is the sale price set?
The investor prices the deal off the leaseback rent: price equals annual rent divided by the cap rate. A 6.75% cap on $570,000 of rent is about an $8.4 million price. The cap rate reflects the tenant's credit, the lease term, whether the rent is at market, and the building's quality and location. Sale-leasebacks to private operating companies generally trade at higher cap rates than credit-tenant net lease, so a lower cap needs stronger credit, more term, or a better building. Be wary of pricing that leans on an above-market rent — you pay it for the whole lease.
What does the sale-leaseback really cost?
The implied cost of capital. Treat the deal as a loan: you receive the cash released today, pay the extra after-tax cost of the leaseback (rent minus what owning cost you), and give up the building's value at the end of the term. The rate that balances those flows is what the money costs you — this calculator shows it, then compares it to the return you expect on the cash. If you can earn more than that rate, the sale-leaseback wins; if not, keep the building. Because the buyer takes the appreciation, growth-market industrial often makes the cash expensive.
How are the taxes on a sale-leaseback handled?
The sale is a taxable event. Depreciation you've claimed is taxed as unrecaptured Section 1250 gain, at a federal maximum of 25%, and the rest of the gain at capital-gains rates (up to 20%, plus the 3.8% net investment income tax for many owners). Florida has no personal income tax, but C corporations pay Florida corporate income tax. A 1031 exchange can defer the tax if the proceeds go into qualifying replacement real estate within the exchange deadlines. Rates and structure depend on your entity, so run this with your CPA.
Will the leaseback show up on my balance sheet?
Generally yes. Under current lease accounting (ASC 842), most leases put a right-of-use asset and a lease liability on the balance sheet, and whether the transaction qualifies as a sale at all depends on its terms — a repurchase option, for example, can prevent sale treatment. Lenders and bonding companies look at this, so raise it with your CPA and lenders before you sign a letter of intent.
When does a sale-leaseback make sense for an industrial owner?
It tends to fit when the business can earn a return on the cash well above the implied cost of the capital, the building is not strategic to the operation, there is no near-term plan to expand into it, and the owner has low tax basis but a plan to defer or absorb the tax. It fits poorly when the building is central to the business, value growth in your submarket is strong, or the released cash would just sit in the bank.
Disclaimer: This calculator is for educational and informational purposes only and is not tax, legal, accounting or financial advice. It uses simplified flat tax rates and assumptions. Actual pricing depends on the buyer, your credit and the executed lease. Consult a CPA, an attorney, and your lender before pursuing a sale-leaseback or 1031 exchange.
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