Operations

Operator Finance Q&A: Should I Lease Or Buy A Fleet Vehicle?

Posted on November 24, 2009

Expert Don Coolbaugh of Advantage Funding continues a weekly series of questions and answers for chauffeured transportation operators on all matters related to financing and leasing fleet vehicles.

Question: What are the tax advantages to leasing vs. buying?

Answer: The tax advantages of leasing versus buying depend on the type of lease you are entering into. The tax benefits may include higher write-off of lease costs and smaller upfront sales tax outlays, depending on the jurisdiction.

Some states allow the collection of tax based on the payment as opposed to paying it all upfront on the sale amount. This way your tax liability would only be for the portion of the lease you use. (i.e. 8% tax rate on a $60,000 purchase would be a $4,800 tax liability on a finance contract).

For those states that allow tax to be collected on lease payments only, there would be no upfront tax liability hence you would only pay tax on the payment each month up until you close the lease.

In addition, many leases are structured for tax purposes as an off balance sheet arrangement thus allowing for payments to be made as a rental expense as opposed to depreciating the interest only on a finance contract. The deduction to the company would be much higher, so your after tax savings would be greater.

Any information as it relates to taxes and liabilities should always be discussed with your tax professional for the best possible solution in your distinct situation.

Source: Don Coolbaugh, vice president of sales, Advantage Funding Inc.

E-mail finance and leasing questions to: [email protected]

View comments or post a comment on this story. (0 Comments)

More News

Uber Launches Internal Probe On Asia Bribery Allegations

The TNC sure has a lot of problems to deal with.

Tech Isn’t The Only Key To Growth

eNews WebXclusive: Terry Murtaugh insists while technology may make a business run more efficiently, personalized customer service must never fall by the wayside.

How Superficiality Destroys The Customer Service Experience

Don't just say you really care about your clients...show it.

MTA Bus, Charter Bus Collide In Queens

All victims were quickly taken off the buses, with the exception of one of the drivers who was pinned and needed to be extricated.

Grand Avenue Partners With Nashville Companies For Hurricane Relief

The businesses are working through the Austin Disaster Recovery Network to gather much-needed supplies.

See More News

Facebook Comments ()

Comments (0)

Post a Comment

Submit

Blog

See More

LCT Store

LCT Magazine - September 2017 $12.95 MOTORCOACH / BUS ISSUE COVER STORY: * Irizar Racks Up A Good Rookie Year * *



Connect

Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment

TruckingInfo.com

THE COMMERCIAL TRUCK INDUSTRY’S MOST IN-DEPTH INFORMATION SOURCE

Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close