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Legal Dictionary

renting

Legal Definition of renting

Related terms


Definition of renting

Verb

renting

  1. Present participle of rent.

Further reading

Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners. This system is used in case of washing machines to handbags and jewelry.

There are many possible reasons for renting instead of buying, for example:

Reasons for renting

  • In many jurisdictions (including India, Spain, Australia, UK and the United States) rent used in a trade or business is tax deductible, whereas rent on a dwelling is not tax deductible in most jurisdictions.
  • Financial inadequacy, such as renting a house when one is unable to buy it. One may not wish to pay the full price that ownership would need, allowing for smaller payments over a specified period of time.
  • Reducing financial risk due to depreciation and transaction costs, especially for real estate which might be needed only for a short amount of time.
  • When something is needed only temporarily, as in the case of a special tool, a truck or a skip.
  • When something is needed that may or may not be already owned but is not in proximity for use, such as renting an automobile or bicycle when away on a trip.
  • Needing a cheaper alternative to buying, such as renting a movie: a person is unwilling to pay the full price for a movie, so they rent it for a lesser price, but give up the chance to view it again later.
  • The renter may want to leave the burden of upkeep of the property (mowing the lawn, shoveling snow, etc.) to the owner or his agents.
  • There is no need to worry about lifespan and maintenance.
  • Renting keeps off-balance-sheet the debt that would burden the balance sheet of a company in case the property would have been bought.
  • Renting can be better for the environment if products are used more efficiently by sharing rather than being disposed of or overproduced.

References:

  1. Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.



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