---
kind: "section"
citation: "38 C.F.R. § 61.4"
title: "38"
number: "61.4"
heading: "Definition of capital lease."
url: "https://uscodex.org/cfr/38/61.4"
---

# §61.4. Definition of capital lease.


A capital lease, for purposes of this part, means a conditional sales contract that either:

- (a) Will be in effect for all of the period of recovery listed in [§ 61.67(b)](/cfr/38/61.67.md?p=b); or
- (b) **That satisfies one of the following criteria—**
  - (1) **The lease transfers ownership to the lessee at the expiration of the lease term.**
  - (2) **The lease contains a bargain purchase option.**
  - (3) The present value of lease payments that are applied to the purchase are equal to or greater than 90 percent of the fair market value of the asset.

## Notes

### Authority

Authority: 38 U.S.C. 501, 2001, 2002, 2011, 2012, 2013, 2061, 2064.

### Source

Source: 78 FR 12604, Feb. 25, 2013, unless otherwise noted.