Businesses The decision to lease or buy a car used for business is not an easy one. There are many financial advantages to leasing. Most important is that you need not put forth more than a small amount of up-front cash to lease, whereas a purchase generally requires a significant down payment. So leasing can enable you to drive a more expensive car than you could afford to buy. However, as a practical matter, if a car is driven extensively (more than 15,000 miles per year), leasing may not make sense because of the annual mileage limit and the charge for excess mileage. In such cases, owning may be preferable. Take into consideration that at the end of the lease term you own nothing, whereas at the end of the same period of time with a purchased car you own an asset that can be sold or traded in for a newer model.
Whether there are any tax advantages is difficult to say. With leasing, you deduct the entire lease charge; with a purchase, you generally deduct depreciation, although you may be able to fully expense up to $25,000 for a car weighing more than 6,000 pounds. Given the current dollar limits on depreciation, this may not be as great as the lease charge. While the inclusion amount is designed to offset this differential, it may not be sufficient to make leasing and depreciation equate.
The only way to know whether leasing or buying is more advantageous taxwise is to run the numbers. Project your deductible costs of leasing versus your costs of purchasing the car.

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