Buy or Lease-10 Tax & Money Factors That Decide - Philadelphia CPA
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Buy or Lease-10 Tax & Money Factors That Decide

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

#9–Flexibility

#10–Personal Considerations

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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