Plan to move up to my new ZTR come Dec. or Jan. I remember from earlier posts that there may be a tax advantage to leasing vs. buying and depreciating over a number of years. I could take out a home equity loan @ 8.5%, but then (I guess) I could take only the interest on the payments as a business expense. Any input from those who have faced a similar situation would be greatly appreciated.
In response to your question. We lease our mowers (Walker mowers) in fact your lease will enable you to claim 100% Tax refund on all your payments when on a Agriculture leases like the one we have and you were asking about. The mower at lease end will be ours for $100.00 thats all, I belive your lease will be the same also or very simular. As for getting a loan I would stay away from that phase of purchase. You may be lucky to end up claiming up to 25% of loan on tax forms for its not proven what the money went for. We have leased all our Walker mowers and purchased all of them at lease end for $100.00 and been doing that for many years. Also the lease company we have will let us pay November through March and have no payments till April. Other option they would let us do is no payments for 3 months during winter months and make it up at the end. From experience I would never even consider a loan unless it was a business loan and a business loan only. The lease company we have is Telmark and they are very helpful and will stand behind there 100% tax break even if audited.
Landscaper3, Do you mean 100% deduction? You said 100% refund. If it was 100% tax refund, that means the mower would virtially be free(except for the $100 buy-out).
On our leases on the Walker mowers we deduct 100% of our payments we made on mowers at tax time. The way the Agriculture leases work are say you pay $4000 a year on leases you are entitled by lease contract to deduct all $4000.00 of your payments to your year to date income. The traditional bank loans dont allow this you have to do a depreciation values but on AG leases the federal Government allows 100% deduction on tax returns for your payments.
Bob did I clear up the question you asked. Its kinda hard but yet easy to explain and was wondering if I clarified myself better on last post?
For a small operator, owner, sole proprietor, you can use depreciation line 179 deduction, which is like writing off up to like 10,000 of a capital expense as a straight expense thus not requiring you to depreciate the item or items. That sounds like a heck of a deal, a buy out of $100. Sounds like a loan that someone just calls a lease. Ag loan, must have been setup to help those poor farmers buy all that expensive equipment. How long will it be before the IRS puts that to a hault? They did it with automobile leasing. They set a maximum price value on the auto. All those friends of mine that had BMW's and Corvettes were scrambling to trade those cars in when they found out that the IRS would not accept a $45,000 auto as a legit business expense and you could only use a percentage of the lease amount based on a 12,000 auto. This ag lease sounds very interesting! I think I will look into this myself this winter. Just curious Brian, what kind of payment and time do you have on a mower and how much was the mower?
I've always leased mine. I make payments April thru Oct. no payments during the offseason. Your payments are higher but it's the only way to go. I use Advance Acceptance for the last 9 yrs on 4 different machines. You can lease for 3 or 4 yrs and get your payments down to about 1 days wages per month, on a Walker, LAZER, OR whatever. Ask your dealers about it. 100% writeoff
lease...possibly. home equity loan to buy a mower...never! just my opinion. I'd take a HE loan only if I were putting the dollars back into the home (sweet home). my situation doesn't fit everyone, I know. GEO
I'm leasing with Telmark, never knew I could skip a payment though! I have one with a baloon payment and the other set up on monthly payments. I have a $1.00 buyout at end of lease. It seems to me that it's just a loan that can be written off. Telmark will lease anything you need for your business. Homer
GEO is right-- I'd never take out a HE loan for a business. Too many things can go wrong. I don't mind loaning my company money, but it has to stand by itself. Paul
