is tax deduction on depreciation allowed to lessor under sales type lease?

Question

please also include the conditions when lessor and lessee can classify the lease differently

Answer 1

The above answer is completely correct. Until the lessee becomes the legal owner of the property they cannot take a depreciation deduction although the lease payments would be deductible if this was a business lease.

If this is a "lease-to-own" proposition I would suspect that since the lease payments were deductible the basis in the property would be considered $0 since the cost was already written off during the lease period. Since the basis would be $0, no depreciation would be allowable even once you became the legal owner. Rob or Judy or one of the other experts here may correct me on that aspect though my gut tells me that it's correct.

Answer 2

I'm not 100% sure what a "sales type lease" is, but I do know that the lessor is given the deduction for depreciation and not the lessee. Since the lessor is still considered to own the property, they receive the deduction.

In the case of leased vehicles, the lessee may take mileage deductions or actual expense deductions if the vehicle is used for business, picks up lease inclusion income, and the lessor takes the depreciation. I am not aware of any situations that would change this, but perhaps someone else is.

Hope this helps!

Answer 3

Uhhh... First you assert that the revenues tax is your in basic terms deduction and then you assert that you shelled out over 50% of your earnings on loan pastime and resources taxes. How is it that you're paying over 50% of your earnings in loan pastime and resources taxes?? it truly is pretty a lot a certain audit. in case you extremely did pay that a lot and would instruct it, with the help of all potential flow ahead and itemize and upload on the revenues taxes besides. in basic terms be prepared for the audit at the same time as it hits. I make 5 cases as a lot and don't have that a lot in loan pastime and resources taxes and by no potential a lot more advantageous in finished itemized deductions.