Zerk
Veteran Member
Read alot of sites on business leases. Still seems to come down to if you are buying more then you can afford. Also amount miles. If you are putting miles on leases are obviously bad, but you would probably be better off with $.55 a mile, as long as you drive enough. Which is what I do for work. Mileage exceeds standard deduction for me.
For a private person, you will not convince you are just buying more then you can afford. The heart wants what the heart wants.
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Generally speaking, a lease is preferable if you only expect to use the vehicle for three years or less, won't put excessive mileage on it, and don't want to make a large financial commitment up front. If you think you're going to keep the vehicle for at least five years and your budget allows for it, buying it outright could be the better option.
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The only time you really get a tax advantage from leasing is when you lease a hyper-expensive motorcar. If you are paying monthly lease fees of $500 or more, plug your costs into the examples above. Because the depreciation deduction is limited, the tax benefits are far higher when you lease a BMW, Eldorado, Mercedes Benz, or other high ticket car
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You can see that you need to look at the combined years to see if it痴 better to purchase or lease a business vehicle. As the price goes up on the car, leasing usually becomes more preferable. But don稚 forget if you purchased the vehicle, you can also deduct the business percentage of the interest on the vehicle痴 loan.
There is one more difference between buying and leasing a business vehicle. That difference is the disposition of the vehicle. When you dispose of a business vehicle that you own, there may be taxable gain or deductible loss. The portion of any gain that is due to depreciation will be taxed as ordinary income. When you return your leased car to the dealer, there is no taxable gain or loss.
For a private person, you will not convince you are just buying more then you can afford. The heart wants what the heart wants.
*******
Generally speaking, a lease is preferable if you only expect to use the vehicle for three years or less, won't put excessive mileage on it, and don't want to make a large financial commitment up front. If you think you're going to keep the vehicle for at least five years and your budget allows for it, buying it outright could be the better option.
******
The only time you really get a tax advantage from leasing is when you lease a hyper-expensive motorcar. If you are paying monthly lease fees of $500 or more, plug your costs into the examples above. Because the depreciation deduction is limited, the tax benefits are far higher when you lease a BMW, Eldorado, Mercedes Benz, or other high ticket car
*******
You can see that you need to look at the combined years to see if it痴 better to purchase or lease a business vehicle. As the price goes up on the car, leasing usually becomes more preferable. But don稚 forget if you purchased the vehicle, you can also deduct the business percentage of the interest on the vehicle痴 loan.
There is one more difference between buying and leasing a business vehicle. That difference is the disposition of the vehicle. When you dispose of a business vehicle that you own, there may be taxable gain or deductible loss. The portion of any gain that is due to depreciation will be taxed as ordinary income. When you return your leased car to the dealer, there is no taxable gain or loss.
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