Determination of Capital or Operating Lease

VA Directive 7815

April 22, 1998

APPENDIX A

DETERMINATION OF CAPITAL OR OPERATING LEASE

When analyzing a possible lease acquisition, if the response to any of the following

questions is "yes," the action must be considered a capital lease and Real Property

Management Office (184) must be contacted before proceeding with the action:

1. Does ownership of the asset transfer to the Department of Veterans Affairs during

the term of the lease or shortly after the end of the lease period?

2. Does the lease contain a bargain-price purchase option?

3. Does VA accept all risks of ownership responsibility for destruction or loss of the

property?

4. Does the lease term exceed 75 percent of the estimated economic life of the asset?

5. Does the present value of the minimum lease payments over the life of the lease

exceed 90 percent of the fair market value of the building at the inception of the lease?

6. Is the building not a general purpose building but designed and built to unique

specification of VA as Lessee?

7. Is there no private sector market for the building?

8. Is the building to be constructed on Government land?

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