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Originally Posted by maxiedaniels
Very interesting! Okay wait, I got lost on some of that terminology. What would provide the best write off? Going through a bank?
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What F87 meant is, if you are able to return the car to the financing company, you can deduct your monthly payments up to the percentage of your business use. In other words, if 70% of your miles driven is for business use, and lets say your monthly payments are $800. You get to deduct $560 (70% of $800) of it as a business expense.
If you are not able to return the car to the financing company, then this could be considered a purchase and you would not be able to deduct the $560 a month. But you would be able to get a depreciation deduction of 70% (miles driven for business) of $3,160 in the 1st year, 70% of $5,100 in the 2nd year and 70% of $3,050 in the 3rd year.
Keep in mind, that you can get the $560 deduction a month for the first 3 years then purchase the car at the end of the lease and still enjoy the depreciation deductions in paragraph 2.
If a high percentage of your miles driven are used for business and you plan to keep the car for 6 years, then it's very advantageous to lease for 3 years and then purchase at the end of the lease term. It can also be very advantageous if the residual factor is low for us business owners. But not good for those who can't deduct and plan to return the car after the 3 year term.