[JCtx]

Unfortunately, will have to sell my Accord due to the fact nobody else in my household drives stick, and I have 2. With my daughter home from college, it's a mess right now. Just started a construction business, and didn't want to tax it too much right now, but if I need another car, might as well let the business buy it. But the question is a purchase or lease? Mileage won't be a problem (maybe 5 to 6K a year).

I'd get something not too expensive, but nice to travel on (and that can cruise at a ton without much trouble ), like a Passat CC 2.0T or IS250 (other recommendations welcome). I also have to check on insurance, to make sure it's not going to cost a ton. This is the first time I'll buy a car for a business. Thanks.

[Feyd]

I would guess leasing would be better....

But,

My advice to you is to find a good accountant ASAP and ask them what would be better for you. The circumstances are going to really depend on specifics of your business/household, etc. Proper tax planning is key for small businesses!

[NYCGarbagePrince]

From everything that I have gleaned from accountants and reading.. Through a business, leasing is best UNLESS you are going to pay for the car in full..

Now i am no expert.. this is only from my experience. I am sure there are people on these boards that would have much more knowledge on the subject.

[JCtx]

Thanks guys. Laws keep changing, so even if something is better today it might not be next year. I'm sure you basically deduct everything regardless, but with a purchase you have limits on the depreciation, and then you can have negative equity, and crap like that. That's why I'm thinking a lease, which is basically a rent, so everything should be deducted. And yes, I'd obviously turn the car in at the 3 years (or whatever) under a lease; that's the purpose.

I have never leased (or financed for the last 20 years), but it might help the business create credit, so I don't have to finance it anymore in the future (or having to personally guarantee loans and credit accounts, like now). I'm not going to look for 'creative' ways to avoid taxes (both times I used accountants they adviced me wrong, and had to pay dearly for it), so will just use TurboTax, like I've done for the last decade. Thanks again.

[NYCGarbagePrince]

TT is a crapshoot... You are giving the Gov't more money than they deserve... try using a reputable accountant, they shouldn't advise you incorrectly.

When your company grows larger (and that is your obvious goal) it is best to hire an accountant. Handling things like this, regardless of your intelligence, is (for lack of a better word) not very smart.

[ideliver]

Originally Posted by NYCGarbagePrince

TT is a crapshoot... You are giving the Gov't more money than they deserve... try using a reputable accountant, they shouldn't advise you incorrectly.

When your company grows larger (and that is your obvious goal) it is best to hire an accountant. Handling things like this, regardless of your intelligence, is (for lack of a better word) not very smart.

+1

You should lease...100% deduction versus depreciation

courtesy of google...

Depreciation Limits for Cars and Trucks 2010

Depreciation on cars and light trucks and vans is limited. There are two different limits--one for cars and one for trucks. (Special tables, not reproduced here, apply to pure electric vehicles.)

Depreciation Limits for Passenger Automobiles

Tax Year

First $3,060
Second 4,900
Third 2,950
Subsequent 1,775


Depreciation Limits for Trucks and Vans

Tax Year

First $3,160
Second 5,100
Third 3,050
Subsequent 1,875


Example: You purchased a new car in June 2010 for $31,000. No matter how expensive the vehicle, your maximum depreciation in the first year (2010) is $3,060. You would take $4,900 of depreciation in 2011; $2,950 in 2012; and $1,775 in 2013 and subsequent years until the car is fully depreciated. Thus, a $31,000 car would take about 10 years to fully depreciate. Note. There are other rules that can further limit your depreciation. The first-year limit also applies to any Sec. 179 expense option.
Note 1: The limitation on trucks and vans in the table above refers to passenger autos that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. Trucks and vans that are over the 6,000 pound loaded gross vehicle weight and qualified nonpersonal use vehicles are not subject to any depreciation limits. In order to qualify, the vehicle must be a qualified nonpersonal use vehicle. For trucks and vans, a qualified nonpersonal use vehicle is one that has been specially modified, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name, so that they are not likely to be used more than a de minimis amount for personal purposes. These specially manufactured or modified vehicles do not provide significant elements of personal benefit, and a taxpayer is unlikely to purchase these vehicles unless motivated by a valid business purpose that could not be met with a less-expensive vehicle. To be sure if you vehicle qualifies, check with your tax advisor.

Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000.

[JCtx]

Originally Posted by ideliver

Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000.

My own brother's accountant uses that rule to depreciate his expensive trucks (currently an '09 Cayenne GTS). Those are the kinds of risks I'm not willing to take. Thanks for all the advice folks.

[NYCGarbagePrince]

I use that rule to depreciate my garbage trucks... they are worth upwards of 250-300k. Anything besides those are leased.

[MediaArtist]

Lease.