Finance category
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Lease Assumption Premium Calculator
Assuming an in-place lease carries premium or discount vs market. This calculator sizes it.
EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.
Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.
Learn more about our review process on the EveryCalc methodology page.
How this calculator works
What this page estimates
This Lease Assumption Premium Calculator is built to give a quick, browser-based estimate for lease assumption premium. Assuming an in-place lease carries premium or discount vs market. This calculator sizes it. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.
Calculation approach
The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.
Example workflow
For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.
Practical checks
- Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
- Run a low, base, and high case when the inputs are estimates.
- Check the related calculators below when the next decision depends on a different assumption.
How to interpret the lease assumption premium result
Best use
Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.
Cross-check
Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.
Watch for
Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.
This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.
Before relying on this lease assumption premium estimate
Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.
Confirm source numbers
Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.
Separate cash flow from total cost
A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.
Run conservative cases
Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.
Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.
How to Use
- Enter remaining lease term months.
- Enter in-place rent per square foot.
- Enter market rent per square foot.
- Enter leased square feet.
- Enter discount rate %.
- Read assumption premium or discount.
Frequently Asked Questions
What is a lease assumption premium?
When a buyer takes over a property with existing leases, the PV of the spread between contract rent and market rent shows up as a premium (below-market tenant = buyer liability) or discount (above-market = buyer asset). It drives allocation of purchase price under ASC 805 and similar accounting rules.
How is market rent determined?
Broker surveys, comps, CoStar/Yardi data, and recent leases of similar space within the submarket. Adjust for floor level, configuration, views, TI packages, and free rent so comps reflect true market economics rather than headline rates.
Why does discount rate matter?
Higher discount rates compress PV of future rent spread; premium/discount shrinks. 7-9% typical for stable multifamily, 8-11% for office, 9-13% for retail. Use the asset-class unlevered required return as a starting point.
When does this matter most?
Mid-lease acquisitions where 3-7 years remain and rents drifted significantly. A 20% below-market lease with 5 years left can easily create $40-90/sf of buyer liability, affecting pricing and allocation.
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