What are the tax advantages and disadvantages of leasing?

Question

Also, who records depreciation of an asset, the lessor or the lessee?

Answer 1

Advantages: Simplified bookkeeping. Lease payments are deductible along with operating costs. No need to maintain depreciation schedules as it's not depreciated by the lessee.

Disadvantages: The usual issues with leases such as possible early termination fees, excess mileage charges, excess wear and damage charges, etc.

That should also answer your second question. The lessor depreciates it as it's his asset, not the lessee's.

Answer 2

When you lease you can charge the full cost of payments against profits. As you do not own the asset you cannot charge depreciation, which is a bottom line tax anyway. The advantage of leasing is in cash flow, allowing the obtaining of assets for the business sooner.