04 Feb Buy or Lease-10 Tax & Money Factors That Decide
It’s the age old question you as a business owner confront when acquiring a new vehicle or equipment –Buy or Lease?
The answer is neither one is inherently superior to the other.
Here are 10 Factors to Consider
#1–What you get for your Money
#2–What you pay Up-Front
#3–What You Pay Per Month
#4–What you Pay for Your Asset’s Decline in Value
#5–The Tax Deductions
#6–What Happens upon Disposal ot Trade
#7–What You Pay in Excess Mileage
#8–What You Pay In Excessive Wear
The after-tax cost is greater to lease than to purchase both business and personal vehicles. I have run the numbers in detail and found that it costs about 10% MORE to lease than purchase. If the fair market value of the leased business car is greater than $15,200, you must add to your taxable income an inclusion amount from the IRS table found in IRS Publication 463. The tax rules appicable to the business vehicle have become very complex, in addition to the proper documentation to support the deduction. Below is only a very general guideline.
Please contact me if you have a small business, and I can provide you with an analysis of the best choice.
WHAT’S IMPORTANT TO YOU CHOICE
Owning the Vehicle Buy
Getting the maximum annual deductions Lease
Buying a new Vehicle every 3 years Lease
Keeping a Vehicle for 7 years Buy
Minimizing up-front costs Lease
Able to drive more than 15,000 miles/year Buy
Getting more expensive Vehicle Lease
Maximizing cash flow Lease
Ease of the Transaction Buy
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