LEASE OR BUY YOUR BUSINESS CAR? TAXES AND OTHER INFO
October 27th at 12:00am Published by firstdownadmin
If you are considering car leasing for your business, you may be wondering if it is better to lease or buy. Here are some factors to consider, including which one gives your business a better tax break.
Here are some comparisons between leasing and buying a business vehicle:
This is different for businesses than for individuals, because of the tax benefits of ownership. Depreciation A leased car typically doesn’t get you any tax benefits (depreciation), while owning the car can give you depreciation deductions.
Up-front costs for leasing and buying are different (down payment vs. first month/security deposit), so you would need to consider these on a case-by-case basis.
You can tax deduct mileage expenses for both leased and purchased vehicles. Higher mileage for a car you own can reduce its resale value. Leased cars have mileage limits, and you can be penalized for going over the limit.
Wear and tear:
On a car you own, excessive wear and tear (all those little dings in the body) can reduce resale value. With a rental car, you may be charged if the wear and tear are “excessive.”
End of term:
With a purchased car, you can do what you want. With a leased car, you decide between buying the car or turning it in. Of course, the dealer may give you a deal to lease another one.