Quote:
Originally Posted by bcrdukes
Aside from the usual business expense write-off (its not as glamorous as everyone thinks) you cannot declare a leased vehicle as an asset. It is a liability in most cases. Say if you went to the bank tomorrow to apply for a mortgage, your mortgage specialist will ask you to declare your assets and liabilities. You can't tell them the vehicle you own is worth $14,500 (or whatever it is) because you don't own it; BMW does. Whereas let's say you actually owned/financed a vehicle, you own the vehicle, so if you chose to only drive your brand new BMW M3 with only basic insurance, that's on you, and the asset itself, is worth, I don't know, let's say $76,000 to the bank, then that is your declared asset to the bank, and they may or may not hold the vehicle as collateral in the event you default on your mortgage. They come in, repo it, and fuck you up for a long ways to come to recoup their losses. When you lease it, they can't do that.
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Key correction here, mortgage specialist (and banks) will also see financing a car as a liability. I know this because I just paid off the 2015 Civic (in my display picture) to qualify for a larger loan.
Quote:
Originally Posted by ssjGoku69
How indepth do you want to tallk about tax impact on lease vs buy? 
Leasing a car is preferred from a tax-savings point of view since the whole payment can potentially be used to reduce taxable income (up to $800/month). When the car is purchased, only the interest portion of the loan payment (if any) and the CCA "depreciation"of the car (valued up to $30,000) can be used to reduce taxes. What i mean is that, if your purchase/financed a car worth more than $30k, the amount exceeding $30k doesn't benefit you for tax purposes. This is where leasing is an advantageous.
When the car is leased, there are more tax deductions, but the trade-off normally is a higher cash outflow. If your business can handle that cash outflow, great, lease it up. |
Another key caveat to business write offs on financing / leasing - it is all dependent on the business mileage : total mileage ratio. A common misconception is that you can write off the car entirely. This is incorrect. Unless it is a purpose built vehicle, like a dump truck, it is very unlikely that it will be 100% business mileage. You will get audited. Be prepared to provide a mileage log for that tax year and your future tax years. In my experience, once you get audited, it's much more likely that you will continue to get audited in consecutive years.
Having said that, leasing/financing a Zero Emissions Vehicle is a good idea, as current incentives allow you to write off 100% of the CCA in the first year, as compared to 30%. Of course, the length of the incentive, is still business mileage dependent. Max is 55K vehicle I believe
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