TRAC Lease vs Commericial Finacing? How do write offs differ?

Best to move this question to the Hotshot forum.

 

Debt is dumb. You're going to pay the bank interest so you can get a write off? Pay cash or don't do it.

 

I think someone explained this to you that doesn’t have a clue. And do not call it write offs or deductions. Both options are business expenses that reduce net income. The added benefit of financing a vehicle s that you can take depreciation, further reducing your net income.
The decision to finance or buy comes down to how much capital you have and how long or intensive the use of the vehicle will be.
There is nothing wrong with financing a vehicle that will make you money. If you’re Credit is decent where you can get a rate of less than 6%, you can’t beat that.

 

The way my accountant explained it to me is that the lease payments are fully deductible under your business entity whereas only the principal and not the interest is deductible on a purchase/finance. You do however get the added benefit of depreciating the equipment over 5 years on a purchase. If you were paying less per month on a lease, that would seem to be the better way to go since you also presumably wouldn't have to put up much of a down payment, but since you say the lease payments are the same because of the term, it sounds like either way works about the same for you.

 

You basically have a choice between using the IRS Standard Deduction or actual expenses. If you are taking the IRS standard mileage deduction of .54 cents/mile, that precludes you from separately expensing all other vehicle related expenses. Lease payment, depreciation, fuel, maintenance - none of that can be written off if you use the standard deduction.

 

Best to actually ask his accountant.

 

Why would I cash out my investments that are earning a higher rate of return than what the interest amount on a loan is?

 

Can you write off more than the vehicle is wort?