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lease or buy

Discussion in 'Lawn Mowing' started by Evan528, May 28, 2000.


    MRPLOW LawnSite Member
    Posts: 88

    Assuming you have another car available for personal use and this truck is "strictly" for business use it will more than likely be to your tax advantage to lease the vehicle. Your entire lease payment will be deductable. I'll try and give you an example using 15,000 miles a year for the first year. Purchase vehicle actual expense method:depreciation=$3060 (20% of vehicle cost limited to $3060), gas=$1500, insurance=$1000, repairs and maintenance=$750, this gives you a total deduction of $6310. Purchase using standard mileage will give you a total dedction of $4650. Now I'll give you the figures using the lease method. Lease using standard mileage will give you the same deduction of $4650. Now leasing using the actual cost method:lease payments=$4800(assuming $400 a month), gas=$1500, insurance=$1000, repairs and maintenace=$750, giving you atotal deduction of $8050. this gives you a $1740 bigger deduction than purchasing. Assuming your in the 28% bracket plus 15% self employment tax this gives you $748 additional dollars in your pocket every year, over 4 years you save almost $3000(this figure varies a little bit since the depreciation deduction for purchasing varies from year to year). If you tell me your lease payment amounts, mileage for the year, and insurance costs I will redo all the numbers and give you actual figures to see which method is best for you.

    MRPLOW LawnSite Member
    Posts: 88

    I forgot something for the purchasing method the interest on the loan will be deductible, this will be somewhere around $1000 for the first year but get less and less as the years go on.<br>
  3. steveair

    steveair LawnSite Bronze Member
    Posts: 1,073

    I'd be carefull leasing because of possible damages. All those scratches and dings can add up quick when the lease is over and the dealer wants you to pay for them. A work truck should be a &quot;work&quot; truck. Worrying about getting mud on that nice carpetting and being afraid to load mulch gets tiring after a while, and before you know it that brand new truck can look like a 10 year old truck. Also, hired help, if you have any, can really put a beating on a nice new truck. <p>steveair
  4. mountain man

    mountain man LawnSite Member
    Posts: 141

    Buy the truck in your name and then have your company lease it from you. You still get the benefits of owning but the company gets the immediate tax benefit of leasing and does not have to worry about dents, miles, etc. However, this does not work if you are a sole prop. Only s-corp, c-corp, or LLC's can do this.
  5. Evan528

    Evan528 LawnSite Silver Member
    Posts: 2,144

    i think i have decided to lease.... this way i will only put down 3 or 4 thousand instead of 15 thousand and ill get a brand new one every 3 years before things start going wrong. i think im also going to spring and buy a new inclosed trailer when i get my new truck.... that way i wont have to pay storage costs!
  6. tjg

    tjg LawnSite Member
    Posts: 118

    I'am fixing to buy another work truck this week, check Dodge and Chevy, I do a large number of business w/ the Chevy dealer so I gave them the deal, also because I was looking for a 2000 1ton cab/Chassis w/ 4x4 & diesel 5spd, it list for 27,000 they will sell it to me at invoice of 24,000 plus $2,500 rebate for the 1ton cab chassis, Single wheel,and if I go through a certified GM Upfitter for the flatbed I get another $600 rebate, just happens that my trailer dealer is certified Upfitter, the nicest flatbed w/ leak proof tool boxes will run $1,532 installed so the New diesel 4x4 1ton will only cost $22,432 w/flatbed installed all I have to get is the tax and tag which will run under $1,000 for commercial truck. The truck does have cloth seat,A/C, tilt, cruise, rubber floor covering. I also am thinking of leasing this truck and purchase it at the end just for the tax write off, also won't have to watch the miles, and I am sure I could always sell it for the purchase price and get around the miles.<p>----------<br>T.J. Greenfield<br>tjg_mc@hotmail.com

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