Deducting higher lease payments vs 3 yr depreciation on purchase?

Dont forget about the 179 ded. where you can offset a good 1st year by writing off a larger amount of the cost of your truck you bought or financed on 1st year tax return.

 

You depreciate the principle, deduct the interest ... Ultimately, with a purchase, the entire amount gets deducted. You just have to be careful. You can write off the entire principle the first year with 179 ... but then you will be faced with payments and very little to no write off in the later years of the pay off.

Lease payments are easier to manage. But, they carry no inherent tax benefit.

 

The advantages of leasing isn't the tax write off - it's the same. It only varies in the nature of what and when.

The advantage of leasing is in lowering your operating costs with new, under warranty equipment. Leasing for beyond 4 years will exceed the warranty and negate the advantage.

 

In my previous business I financed all my trucks and depreciated them over 5 years, when I bought my big truck I did so through a lease purchase. It was a sliding scale payment dependent on net income, therefore, I was able to pay the truck off in 29 months, if I had used a 5 years payment and depreciation plan as I had in the past, I would have paid more in taxes on income while paying off the truck. It all really would work out the same but if for some reason I had not paid off the truck I would have paid more in taxes those first three years and would not get the full depreciation.

 

Everyone worries about deductions, but you make more money once the truck is paid for. Get an old truck get it paid for and buy new trailers deductions.

 

Don't forget once you pay that lease off if the truck becomes yours you are now obligated for capital gains tax. I have always bought an older truck paid it off quickly as possible. Once it is paid off you can do some serious maintenance if you want and even chrome and that is just as deductible as the lease payment. I found in my later years of trucking instead of finding things to buy to offset the taxes I would just work less, and let me tell you that has been the greatest write off of all the tax laws and I have made just as much money.

 

Great point, I also will buy something like a new tractor, or add on at the shop for a write off.
Tools and new air compressors stuff like that is fun to buy as well.

 

You pay capitol gains on any asset, when you sell it and only when you sell it. Doesn't matter how acquired it, through a lease, financing or paid cash.