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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 15831
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My income is made up of rental income and social security

Customer Question

My income is made up of rental income and social security benefits and I deduct vehicle expenses for each rental property. I currently lease and get a big vehicle expense right off. If I buy something used instead, to save a couple hundred dollars a month, will I lose that savings in the vehicle expense right off at the end of the year because it isn't a lease?
Submitted: 8 months ago.
Category: Finance
Expert:  Lane replied 8 months ago.

Hi. My name’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

I’m reading your question now.

Bear with me a moment while I type up my response.

….

Then if you have further questions we can go from there

Customer: replied 8 months ago.
You almost beat my stepfather's brother with number of initials after your name but he had a PhD also and minus the CRPS. Thanks for your time.
Expert:  Lane replied 8 months ago.

When we deduct business use of auto's we either take the mileage deduction or the actual cost.

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If we own the car and use the actual cost method, (rather than mileage which is just a big average that replaces the actual costs) then we depreciate instead of lease (and then take all the rest of the vehicle expenses such as oil & gas, repair and maintenance, etc., as well).

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And there's something called the lease inclusion amount (likely figured automatically with your turbotax, H&R Block software, etc) that keeps the lease from being more than what the depreciation would have been.

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So you shouldn't see a lot of difference.

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AND, of course, there's now the Section 179 deduction that lets us accelerate the depreciation all into the first year (within limits) 11,600 for cars and trucks, 25,000 for SUV's - you then depreciate the rest regular way in the following years

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(Of course spending less money means a little lower write off) - just as the lease cost would be less (generating a lower write off) if you leased a less expensive car

Customer: replied 8 months ago.
Understood. But turbo tax did not ask me for my lease payment. It only asked if I owned or lease, the number of miles used for business / personal, and if I was using the standard mileage rate which I said yes.
Expert:  Lane replied 8 months ago.

Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars on your screen, and then clicking “submit")

That’s the only way JustAnswer.com will credit me for the work.

But again, let me know if you need more here,

Lane