Can a vehicle be PURCHASED and written-off to your taxes as a business expense, or do you have to LEASE?

Question

This vehicle will be used for a small business as a company car/truck. I am looking for the most taxable write-off in regards to leasing or purchasing.

Answer 1

Vehicles are considered listed property. As listed property, there are limitations to how much you can depreciate per year if you own the asset. If the vehicle gross weight exceeds a certain weight (some of the larger SUV's like the Hummer and Expeditions meet the weight limit), then it won't be considered a passenger vehicle subject to the listed property depreciation limits and you may fully depreciate it in one year under the Section 179 election. If you lease the vehicle, then you can deduct the lease payment.

Answer 2

I believe the weight limit is 6,000 pounds. So if your SUV is over 6,000 you can "expense" it in one year.

Assuming this is for your 2006 business year and you purchase a regular car you will be limited on the depreciation you can take if you have purchased no more assets. The IRS limits the amount of depreciation you can take if you buy a bunch of stuff at the end of the year (for the tax right off). If you buy something under 6,000 pounds might be better to wait until 2007.

Answer 3

You can write it off either way. The decision to buy or lease comes down to the cost. Compare the total cost to own and the total cost to lease and go the cheapest way.

Answer 4

If you purchase it, you'd depreciate it over several years, rather than just write off the whole amount in the year of purchase.

Answer 5

if you lease it through the business, all costs will flow thru the business. you will need to keep track of personal mileage on the vehicle which would become income to you on your personal return.

Answer 6

Yes, it's just a heck of a lot more paperwork.