Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
Have an older car I have driven forever as a work horse.Looking at trading it in for a brand new car on a lease.
Normally I wouldn't look at a lease but I am thinking I can write it off in my corporation.
I am not a tax expert and I do not want to buy a gas guzzling truck just to get a deduction.If I bought say a new Camry would they let me deduct the lease off of my corp taxes OR would it be better to buy it through the corp and make payments without a lease??
Note Investor · Pasadena, CA · Member since 2009 · 849 posts · 544 votes
15y
Yes, you can deduct all expenses associated with the car (lease, maintenance, insurance, etc.).
The amount you can deduct is a function of how much you use it for business (i.e., if you use it 50% of the time for business, then you get to deduct 50% of the expenses).
At least that is my understanding after having these types of discussions for years with my CPA.
Note Investor · Pasadena, CA · Member since 2009 · 849 posts · 544 votes
15y
Yes, you can deduct all expenses associated with the car (lease, maintenance, insurance, etc.).
The amount you can deduct is a function of how much you use it for business (i.e., if you use it 50% of the time for business, then you get to deduct 50% of the expenses).
At least that is my understanding after having these types of discussions for years with my CPA.
Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
15y
Joel - as I can imagine, you drive a lot. Lease purchase will only give you certain mileage allowance (15k miles), so you might want to take that into consideration.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
15y
Joel, yes you can have your corporation deduct the vehicle and provide that to you as a benefit. Otherwise you may purchase or lease the vehicle and deduct it based on the mileage % that is business versus personal. You may also deduct any finance charges etc that come about as leasing and purchasing the vehicle.
Accountant · Member since 2008 · 119 posts · 52 votes
15y
You have two options: 1. Take actual expenses (lease payments, fuel, etc). If you use this amount in year 1, you must continue throughout the remainder of the lease. or
2. Take the predetermined IRS mileage rate.
Both of these will be allocated depending on your personal/business usage percentages.
One thing no one has mentioned is something called the Lease Inclusion amount. There is a limit (I believe it's around $18,000) where if the vehicle is over this market value, then the lease expense starts getting prorated. This was designed to keep people from leasing luxury cars through their businesses to avoid the luxury vehicle tax limitations.
IMO, if you are driving a ton of miles a year, you are simply destroying the value of the vehicle. You might as well buy a vehicle 2-3 years old and let someone else take the first year depreciation hit. You could claim Section 179 expense on this purchase and take the purchase price as a deduction in year 1 (assuming you have a positive net income). A passenger vehicle like a camry will have a limit, I believe around $11k, and with a vehicle over 6000 lbs such as a heavy duty truck, you will be able to take the entire amount in year one. (up to your net income).
