Quick Summary: Lease vs. Buy for Your Business Vehicle

Key Takeaways:

• Deductibility: Whether you lease or buy, you can generally deduct the portion of your expenses related to business use. So, if you use the car 60% for business, you can deduct 60% of the relevant costs.
• Purchase: You can deduct interest on the loan and depreciation over 5 years. There's also a potential first-year expense deduction (currently capped at $20,200 for 2023), but this has some limitations, especially for luxury cars.
• Lease: You deduct a portion of the lease payments, but there's a bit of a catch. You have to reduce your deduction by an "inclusion amount" to even things out with the depreciation you'd get if you bought it.

Need More Info?

This is a simplified overview. The actual calculations, especially for the lease inclusion amount, can get pretty complex. If you'd like to dive deeper or see some examples with real numbers, contact us!