LR4 - 100% depreciation for small biz

[BDM]

Hey guys, just wondering if anyone has any experience with this. I've spoken with my accountant but he wasn't much help as far as lease vs. buy. My understanding is that a new LR4 is 100% depreciable (cost, maintenance, gas, etc) for small biz.

http://www.landrover.com/us/en/lr/special-offers-and-financing/small-business-tax-advantage/

Any thoughts would be appreciated on the lease vs. buy.

Thanks,
Brendon

 

[Tugela]

You should get a second opinion from another accountant who has more familiarity with this aspect of the tax code. I remember a few years ago pickup truck and Hummer sales were humming because buyers received substantial tax breaks for small business use. The GVW requirements encouraged it. As long as you can qualify for this incentive you should use it. The lease vs buy decision might also be influenced by how long you plan to own the vehicle. It is a straightforward cost-benefit analysis.

Calculate your total leasing costs over the lease period, including down payment, monthly payment, any business tax breaks you get, etc. Have your accountant calculate your ownership costs including the tax benefit and however you plan to purchase it (finance costs if you're not paying full purchase price in cash up front). It will be interesting to see the difference.

 

[BDM]

Thanks. I'll do that. It sounds like a great opportunity if it works out.

 

[Brian425]

This falls under section 179 in the tax law. The basics are a vehicle over 6,000lbs will qualify for a tax benefit. Essentially, you expense the first $25,000 and depreciate the rest over 5 years.

Basically if your LR4 costs $55,000 you would expense $25,000 the first year and depreciate the $30,000 over 5 years. It should save you roughly $10,000 in taxes in the first year.

Speak to you accountant (I'm a business analyst, not an accountant). They should know or be able to research it pretty easily.

 

[jwest]

... 100% depreciable (cost, maintenance, gas, etc) for small biz.

http://www.landrover.com/us/en/lr/special-offers-and-financing/small-business-tax-advantage/

Any thoughts would be appreciated on the lease vs. buy.

NO, you are off. The "vehicle" ends up being 100% depreciated over 5 years however that's it. The other things you mentioned are not part of the vehicle. No gas, no maintenance, nothing except purchase price. You might be able to wiggle a little there if you included at the time of purchase, a maintenance plan but generally, it is the vehicle price only, the above wiggle would actually be considered fraud if it were ever looked at closely.

Leasing makes more sense for "cars", weighing less than the 6000 lb gvwr because the only way to benefit is by the lease payments or cost of use such as mileage.

I repeat, you do NOT get both the suv depreciation AND mileage deduction.

Also, there are some little bits about how much you use it for business vs personal.

Get a new accountant. This is VERY simple stuff for one who does anything for business folks.