2006-12-14 00:43:33 · 4 answers · asked by cntrybmpkn_95 2 in Business & Finance ➔ Taxes ➔ Other - Taxes
The main difference is when you purchase a vehicle for business use, you claim the depreciation deduction based on the cost of the vehicle, generally over a useful life of 5 years. Automobiles are considered listed property, so there are limitations as to the maximum amount you can deduct per year, so with the limitations, it may take you more than 5 years to fully depreciate the vehicle.
When you lease a vehicle, you are basically renting the vehicle, so your lease payments would be the deduction. There is a small inclusion amount you may need to report as imputed income to address the personal use of a lease business vehicle, however the inclusion amount is based on the fair market value of the vehicle and is rather small in comparison to the lease payments.
For business deduction purposes, you are generally better off leasing a vehicle versus purchasing it.
2006-12-14 04:18:22 · answer #1 · answered by jseah114 6 · 0⤊ 0⤋
On a lease or purchase, ALL expenses/gas is expensed, as well depreciation on purchase, if you have a second auto for personal use. Otherwise, you will lose some tax savings for personal use. If you do not record personal use, the IRS uses an estimated %.
I once had a company truck that was fully depreciated. I personally purchased the truck from the business for a song. The price I paid became income as sale of an asset to the business.
A lease is totally expensed by the business, but bear in mind the limited mileage allowed. Usually 15K per year. If that is exceeded, the excess mileage cost at lease end is atrocious.
2006-12-14 01:06:59 · answer #2 · answered by ed 7 · 0⤊ 0⤋
leasing a vehicle can be the BIGGEST money mistake EVER!
most people that lease a vehicle end up taking out a loan to buy it outright b/c they are going over their alloted mileage or the car has cosmetic defects that they would get charged for.
there are times when leasing makes sense, though. if it can be written off to the business for tax purposes and therefore can save money in the long run. if it's not going to be used so much that it will exceed mileage and if it's going to be taken care of.
i don't recommend leasing vehicles, but it can work out in some cases.
take care!
2006-12-14 00:53:32 · answer #3 · answered by joey322 6 · 0⤊ 0⤋
leasing will not show it as an asset
2006-12-14 01:45:57 · answer #4 · answered by Anonymous · 0⤊ 0⤋