Claim leased vehicle in Taxes??

Question

I am a real estate agent and I was looking to purchase a new car. The car sales manager told me that It would be better to lease a car instead of purchasing it. He said I could claim the entire lease amount during taxes.. I was wondering how is that possible.. This year my sale was around 50K net so How would I be able to claim a $10K car payments in my tax returns??

Answer 1

first, let me say, i think leasing is more advantageous to the car sales man,,,,, with that said, any auto used for business can be claimed on your taxes, or a portion of it ,,,, call the IRS and they can give you the info or send you info on this subject,,, i believe if you soley use a car for business, the total amount is deductable,,,, if you partly, a portion, this would apply whether leased or not ,,,,, hopefully you would not, in a year, make $10k in car payments! only the years cost would apply to each years taxes

Answer 2

First, let's assume that the vehicle qualifies for the business use test. Having said that, the IRS limits deductions for depreciation for owned vehicles used in a business. Lease payment amounts are deductible, but the IRS requires the reporting of income based upon the fair market value of the vehicle at the time the lease was entered into. The IRS publishes new tables each year with these amounts. Technically, you may deduct the full amount of the lease payments if the vehicle is used 100% for business. The amounts that have to be added back as income are small in relation to the lease payments. The bulletin cited below has the 2006 depreciation limitation tables and the lease income add back tables.