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I am a sales rep. for a Athletic Footwear company. I only…

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I am a sales...

I am a sales rep. for a Athletic Footwear company. I only drive about 13,000 miles a year. All the cars I have had, I purchased new. I avoided leasing because in the past I was driving much more (20,000+ miles). Now that I don't drive so many miles, I am wondering about the tax advantages and disadvantages to leasing.

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

In the past my accountant has always depreciated my car, but as I understand it you can only do that for a limited # of years.

Submitted: 5 months ago.Category: Tax
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Answered in 14 minutes by:
11/20/2017
Tax Professional: Lev, Tax Advisor replied 5 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,719
Experience: Taxes, Immigration, Labor Relations
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You are correct that tax deduction for leased cars are larger.

However - the actual leasing cost will be larger.

So when we are talking ONLY about tax benefits for leased cars - that woudl not be correct question.

You woudl not lease a car only because of tax benefits.

If you what to have newly cars and not to worry about selling it - may be leasing will be better option.

Additional tax benefits (larger deductions) will only reduce your after tax cost of leasing - but tax benefits themselves are not actual "benefits" ...

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Tax Professional: Lev, Tax Advisor replied 5 months ago

Some other issues to consider...

Most lease agreements have lower down payment requirements, you would pay less for the sales tax on a lease as well.

Leasing a car often has a lower monthly payment compared to car loans with the similar terms.

But in the long run - buying a car is almost always cheaper regardless of larger tax deductions for leased cars.

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Customer reply replied 5 months ago
I was primarily interested in the tax deduction. So you are saying that a lease will give me a larger tax write off than the depreciation on buying a car, correct?
What do you mean when you say the actual leasing cost will be larger? Do you mean in the long run I will spend more leasing the car as opposed to buying it?
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