Does It Ever Make Sense To Lease A Vehicle
I am wondering if there is ever a case when leasing a vehicle makes sense tax-wise?
I can understand cash flow reasons but am wondering from a tax viewpoint if there is a time that ti would be better to lease than buy?
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There is no tax advantage to leasing a vehicle. Mileage, gasoline, repairs, etc. can be written off as a business expense whether you are leasing or own the car.
Yep, and you build equity, too.
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The way that it makes sense is if you exercise the purchase option at the end and it is cheaper than if you had to go out and buy the vehicle in the open market at that point.
The way to save money is to pay off the car and not have a perpetual payment. Cars last a long time (at least a 150k miles) with proper maintenance.
I am glad to get some feedback, I have had this argument with my office for some time...
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Hey,
It is good to get answers, but no one gave you the correct one.
What you are talking about is a basic Lease, Buy Comparison. Basic Account 101. But without some hard numbers, NO ONE can answer this question.
Basically, it boils down to what are the lease payments (which are tax deductable as an expense) and what is the projected resale value of the car (for the buy side).
Bruce.
you are self employed buy a suv with over 6,000 gross weight and you can write off 25k the first year. it is a beautiful thing.
a lease can also help as long as you are self emplyed or a business owner. for the average person it makes more sense to buy but for a business owner talk to CPA to weigh the differences I have seen it where the lease has come out ahead.
I bought a Trailblazer last year just to get the write off.
here is a good link on some info. http://www.selfemployedweb.com/suv-tax-deduction-list.htm
I was aware of the 6000lb requirement for the write off but had thought that last year was the last time you could take that deduction?
I have heard of first year expensing up to 100k? but am not sure it applies to vehicles..
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So, even after all the responses you got so far, the bottom line is still the same.
For tax purposes only (and that was the constraint you asked us to respond under) there is no difference between leasing and buying -- you still get to "write off" your cost of the vehicle whether through expensing the lease payment or depreciating the asset.
Whichever you choose to do has the same tax effect, but your annual cash flow will be affected by your choice.
Good advice!
True--the credit requirement may stop you. Taking over a Lease might work also, as there are companies who specialize in that with lower qualifying standards. You can do a search and find them. Normally, you can either apply for a Lease assumption or list yours on the same site.
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