Leased Vehicle tax claims

Discussion in 'Lawn Mowing' started by Strawbridge Lawn, Mar 5, 2003.

  1. Strawbridge Lawn

    Strawbridge Lawn LawnSite Senior Member
    Posts: 660

    Since it is the season, I was wondering who out there leases their trucks, and how they claim the lease regarding taxes. What is claimable. I am a sole proprieter and I am wondering whether leasing is better than owning for tax purposes.
     
  2. Henry

    Henry LawnSite Senior Member
    Posts: 549

    I lease 2 trucks and they are 100% deductible. Just like renting equipment.
     
  3. bruces

    bruces LawnSite Senior Member
    Posts: 648

    Similar to owning, the tax deduction will depend on the portion used for business. If you use it 100% for business, 100% deductible, 70%, 70% deductible.

    As far as leasing vs. owning, with the new depreciation rules no hard and fast answer, with owning you get depreciation, interest, etc. With leasing you get the total lease payment as a write off, if it is a true operating lease and not a financing lease where you own the truck at the end.

    Talk to your tax advisor.
     
  4. Angelo

    Angelo LawnSite Member
    Posts: 59

    Assuming the vehicle is 100% business use and there is another vehicle available for your personnal use, than the only part that is not deductible is whats called the lease inclusion. Lease inclusion is a tax calculation your accountant does that will deduct about $100 from your lease payments for the year the first year, and change each year of the lease.
    If the vehicle is not 100% business than you would multiply the % that is business use by the lease payments. so say you drive 20,000 miles a year, of which 5,000 are personal than simply mutliply your lease payment by 75% less the lease inclusion and that is your deductable amount.
    Also you cannot use the standard mileage rate since it is a lease vehicle. So all actual costs go in like gas, repairs, insurance so be sure to keep all that information.
     
  5. Strawbridge Lawn

    Strawbridge Lawn LawnSite Senior Member
    Posts: 660

    I will talk to a local tax person to verify the details, but thankyou thus far for your replies. One thing I did note was the amount of depreciation this year. I actually thought the figures were wrong and had the guy do em over. Turns out they were right.

    The way I understand it is
    If I lease for 48 mos. The lease payment 400.00 plus the gas ($225.00) and maintance (12.00) costs on the vehicle are all deductible? total $637.00 p/month or $7644.00 p year. (100%
    biz use.
    That sound right to you pro's?
     
  6. Angelo

    Angelo LawnSite Member
    Posts: 59

    Ya that sounds right, don't forget property taxes, if they are not in the lease payment along with your insurance payments.
     
  7. Angelo

    Angelo LawnSite Member
    Posts: 59

    If you owned the vehicle you can load up on the front end with depreciation, so if your truck is over 6,000lbs (vehicle weight) you can depreciate up $24,000 the first year. I guess it depends on your imparticular situation, but I tell all my clients its better off to own. Lets say you travel 15,000 miles a year for business at .36 a mile for standard mileage rate you get a $5,400 deduction plus your depreciatin for the vehicle, say you did straight line over 5yrs you would also get 1/5 of the trucks cost to depreciate, and you can write off the interest still, along with property taxes.
     
  8. Strawbridge Lawn

    Strawbridge Lawn LawnSite Senior Member
    Posts: 660

    Thank You. Owning is sounding better. Thank you for your replies.
     
  9. bruces

    bruces LawnSite Senior Member
    Posts: 648


    Not true!!!

    The mileage includes depreciation. You can't take mileage and depreciatin both!!

    Also, remember, if you write off all or most of the truck this year, you could be hurting in the long run with no deductions next year.
     

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