New Car - Buy or Lease


B

beckkl

I am a sole proprietor, and I drive my current personal car 95-100% of
the time for business use. Currently, I am taking the standard
mileage deduction, which has been significant in years where I've
driven over 20K miles. Now, I am looking to get a new vehicle. I
have another vehicle I can use for personal use, so I intend to only
use this vehicle for business purposes. I know that leasing has its
benefits, but I'm not sure the benefit is there for me unless I am
buying an expensive vehicle. I was looking at a car costing around
22K. So if I just purchased it, and continued to take the standard
mileage, I could be deducting anywhere from 7K and 10K per year. I
know the lease payment would be far less a deduction.

So, I'm assuming that taking the standard mileage deduction is a huge
benefit to those driving an cheaper vehicle that gets good gas
mileage.

Am I missing anything here?
 
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W

William Brenner

beckkl said:
I am a sole proprietor, and I drive my current personal car 95-100% of
the time for business use. Currently, I am taking the standard
mileage deduction, which has been significant in years where I've
driven over 20K miles. Now, I am looking to get a new vehicle. I
have another vehicle I can use for personal use, so I intend to only
use this vehicle for business purposes. I know that leasing has its
benefits, but I'm not sure the benefit is there for me unless I am
buying an expensive vehicle. I was looking at a car costing around
22K. So if I just purchased it, and continued to take the standard
mileage, I could be deducting anywhere from 7K and 10K per year. I
know the lease payment would be far less a deduction.

So, I'm assuming that taking the standard mileage deduction is a huge
benefit to those driving an cheaper vehicle that gets good gas
mileage.

Am I missing anything here?
You might be missing the fact that you expended $22,000 (plus interest
if you financed the purchase) of after tax funds to purchase the vehicle.
 

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