Your decision to buy or lease your company car depends heavily on your budget, intended vehicle use, and the tax implications.
It will be better for your business to buy the vehicle due the following reasons:
- You have enough cash to put down a good down payment to reduce your monthly payments.
- You want to reduce long term costs by paying off the vehicle in a few years
- You plan to put on more miles on the vehicle than what the lease agreement allows
- You are eligible to take 179 expense deduction for all or portion of the cost of the vehicle the year it is placed in service depending on the type of vehicle and business usage
- You can depreciate the rest of the cost over a period of years for the business usage
- Take advantage of tax breaks available for purchased electric and hybrid vehicles
When you purchase the vehicle you can deduct 70% of all costs related to the vehicle (since you indicated it will be used 70% for business). You will be able to deduct the interest you are paying every month (70%) if you take a loan on the vehicle. Loan payments are not deducted as loan payments, rather you take depreciation expense for the vehicle.
It will be better for your business to lease the vehicle due to the following reasons:
- You do not have significant amount of cash for a downpayment
- You are conmfortable with the mileage restrictions on the lease
- You prefer to avoid the hassle of selling or disposing of your company car at the end of its useful life.
Every business is diferent, therefore I have listed the advantages of leasing or purchasing the vvehicle. Please consider the above information and make the the choice that best suits the needs of your business
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