writing off a leased car as a business expense?

henryyxyu · 02-20-2010, 09:24 PM

A friend of mine recently told me that its cheaper to lease a car if you own a business and I'm a bit curious as to how this works... I looked around on google but I still dont quite understand how this works

(a bit braindead today I suppose). Can someone explain this to me? xD

Leonardo629 · 02-20-2010, 09:31 PM

it's cheaper because you're using pre-taxed money to lease, so it's an easy 20~30% saving.

If you're using your pay check money to lease, then it's after-tax money you're using.

Hope it's clear for you.

SpencerM3 · 02-20-2010, 11:26 PM

It can be a slippery slope. Will you be using your car for work or can you claim that you do?

If you buy the car all you can write off is the depreciation, typcially over the length of the lease/loan, you end up writting off more on a lease.

dimabimmer · 02-20-2010, 11:46 PM

I was wondering about that too... Thanks for explanation... Now I need good accountant to do all the business expense profit loss stuff...
Went to H&R Block, they said $800+ to file business tax for corporation. Is that a crazy fee, or is this a normal fee for small business tax filing?

henryyxyu · 02-21-2010, 07:37 PM

Quote:

Originally Posted by SpencerM3

It can be a slippery slope. Will you be using your car for work or can you claim that you do?

If you buy the car all you can write off is the depreciation, typcially over the length of the lease/loan, you end up writting off more on a lease.

So technically I can lease first then opt to buy the car at the end of the lease right? (I've never leased a car so im pretty noob at this

). I'm not the employee if it makes any difference. (family business)

getalot681 · 02-22-2010, 12:26 PM

Quote:

Originally Posted by henryyxyu

I'm not the employee if it makes any difference. (family business)

I'm pretty sure you need to be using the car as part of your business and keeps records of use. No idea how many people fake the use/records but seems like it would be a bad idea to do so.

xchosun1x · 02-22-2010, 02:25 PM

if you are self employed and have the proper steps of making sure you are set up as a corporation, that is a good start. I am self employed and make sure all expenses are paid through a completely separate account, including a car, auto insurance, gas etc. My CPA does all my book keeping and will properly proportion a deduction for the use of the car for business and personal.

platinumpapi · 02-23-2010, 04:15 AM

I am in the same exact situation too. Family owned business, but my lease is about to expire in a few months. We are a cash business too. Our business is a corp and we use the bmw for both personal and business. What do i ask or tell my accountant so that he can add it to our expenses before we file our taxes?

02-20-2010, 09:24 PM	#1
henryyxyu Captain 108 Rep 636 Posts Drives: YXZ Join Date: Jul 2009 Location: CA iTrader: (1)	writing off a leased car as a business expense? A friend of mine recently told me that its cheaper to lease a car if you own a business and I'm a bit curious as to how this works... I looked around on google but I still dont quite understand how this works (a bit braindead today I suppose). Can someone explain this to me? xD
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02-20-2010, 09:31 PM	#2
Leonardo629 Lieutenant Colonel 168 Rep 1,792 Posts Drives: 2013 M3 Coupe Join Date: Sep 2006 Location: Taiwan iTrader: (10)	it's cheaper because you're using pre-taxed money to lease, so it's an easy 20~30% saving. If you're using your pay check money to lease, then it's after-tax money you're using. Hope it's clear for you.
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02-20-2010, 11:26 PM	#3
SpencerM3 Sauce 75 Rep 2,023 Posts Drives: 2009 SSII E90 M3 Join Date: Jun 2006 Location: Los Angeles iTrader: (1)	It can be a slippery slope. Will you be using your car for work or can you claim that you do? If you buy the car all you can write off is the depreciation, typcially over the length of the lease/loan, you end up writting off more on a lease. __________________ 2009 E90 M3 \| Silverstone II \| Black Novillo \| HRE P40's \| Akrapovic Exhaust \| Eibach Pro Kit \| Jet Black Kidney Grilles \| SSII Side Reflectors \| SSII Side Gills \| LUX H8 Angel Eyes \| Macht Schnell Filter \| Tecnocraft Envy Charge Pipe "M3 drivers have no friends." - Jeremy Clarkson
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02-20-2010, 11:46 PM	#4
dimabimmer Lieutenant Colonel 148 Rep 1,885 Posts Drives: '11 E92 M3 ZCP 6MT Join Date: Apr 2009 Location: Brooklyn to SoHo NYC iTrader: (0)	I was wondering about that too... Thanks for explanation... Now I need good accountant to do all the business expense profit loss stuff... Went to H&R Block, they said $800+ to file business tax for corporation. Is that a crazy fee, or is this a normal fee for small business tax filing? __________________ '11 E92 M3 ZCP SG 6MT Tech Sound USB Heat Cloth Aluminium Sunshade http://www.m3post.com/forums/showthread.php?t=422151
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02-22-2010, 02:25 PM	#7
xchosun1x Track Duty 266 Rep 2,467 Posts Drives: Track build 08 E92 M3 DCT Join Date: Nov 2009 Location: Los Angeles iTrader: (14)	if you are self employed and have the proper steps of making sure you are set up as a corporation, that is a good start. I am self employed and make sure all expenses are paid through a completely separate account, including a car, auto insurance, gas etc. My CPA does all my book keeping and will properly proportion a deduction for the use of the car for business and personal.
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02-23-2010, 04:15 AM	#8
platinumpapi Sylish Driver 14 Rep 91 Posts Drives: bmw 335i Join Date: Feb 2010 Location: alabama iTrader: (0)	I am in the same exact situation too. Family owned business, but my lease is about to expire in a few months. We are a cash business too. Our business is a corp and we use the bmw for both personal and business. What do i ask or tell my accountant so that he can add it to our expenses before we file our taxes?
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