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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14842
Experience:  15years with H & R Block. Divisional leader, Instructor
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Deciding on buying/leasing a minivan (honda) uses. Buying

Customer Question

Deciding on buying/leasing a minivan (honda) for business uses.
Buying
------
- Is down payment deductibe?
- Is monthly payment deductible? If yes, entire or how much deductible?
- What else would be deductible?
Leasing
--------
- Is down payment deductibe?
- Is monthly lease payment deductible? If yes, entire or how much deductible?
- What else would be deductible?
Any other tips you would like to share, would appreciate.
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

There are couple of ways to deduct business use of vehicle. You can deduct standard mileage, set amount, usually around 55c per mile OR you can deduct actual expenses, which would include depreciation, insurance, maintenance....

Down payments are not deductible, the value (purchase price) will be deducted through depreciation (little bit every year). Monthly loan payments are not deductible, only the interest. If you lease your car instead of purchase it, you will be able to deduct lease payments but not depreciation.

If you use the vehicle for business as well as personal use, you will only be able to deduct percentage allocated to business use. You will have to keep mileage log to determine business and personal use.

Expert:  emc011075 replied 1 year ago.

Here's a good break down of the various options for deducting business use of vehicle, including record keeping requirements:

http://www.bizfilings.com/toolkit/sbg/tax-info/fed-taxes/business-use-of-car-can-be-deductible.aspx

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

Expert:  Robin D. replied 1 year ago.

Hello

The other expert placed your question back on the list.

Buying ------ - Is down payment deductibe?

No the down payment on the vehicle is not deductible when you buy.

Is monthly payment deductible?

Yes but only the interest portion of the payment.

What else would be deductible?

Either your actual miles or your costs to run the vehicle.

Actual car expenses include:

Depreciation
Licenses

Lease payments

Registration fees

Gas

InsuranceRepairs

Oil

Garage rent

Tires

Tolls

Parking fees

OR you can use a standard rate based on miles. This is easier but still requires you to list all miles driven.

Leasing -------- - Is down payment deductibe?

Is monthly lease payment deductible? Yes

If yes, entire or how much deductible?

If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible expense. If you choose to use actual expenses, you can deduct the part of each lease payment that is for the use of the vehicle in your business (if used 100% for business then 100% of payment is deductible)

What else would be deductible?

The same expenses as a purchased vehicle from the long list I provided above if you use actual. If you choose to just count your miles then the payment and the miles are all you deduct.

Any other tips you would like to share, would appreciate.

If you're only planning to keep it for the short term, you may find that leasing is better . Of course the payment is deductible too where if you purchase only interest is allowed (should you finance).

As I said before, I am not sure why your first expert placed your question back on the list as I saw no response from you. Please advise if you need more information but rating in a positive way is acceptable.

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