Perhaps you have the mistaken belief that you can't afford a new car this season, but you'd be sadly mistaken if you thought that you couldn't afford it because business owners have options with tax advantages. While it depends on your circumstances, business owners might have the option to get a new car this season because they can write it off on their taxes. However, this depends on the route you choose to go when buying a car. Typically, you have two different routes with taxes when it comes to buying a car. If you leased a car, it will be different than if you financed a car.
Financing a Car: What Can You Write Off?
Typically, with financing vehicles, you won't have the option to write off the monthly payments because the government set up the tax system a little differently. Instead, you can deduct the depreciation on the vehicle, which you could do if you had leased the car. You will also have the ability to deduct the car loan interest on a portion of each payment. When you finance a vehicle, you typically can't deduct all the payments off it all at once, and you will have to deduct the payments over the course of a couple years.
How Can You Qualify for a Write-Off?
With leasing a car, you can't write off the depreciation because you technically don't have ownership rights of the vehicle-the leasing company does. However, you do have some tax advantages over financing the car because you can deduct the monthly payments on the lease. To write off the monthly lease payments, you need to show some of your expenses that you used the car for on business trips. What tax advantages you get from a lease will depend on the type of lease that you signed up for.
How Do I Find Out More about Write-Offs?
The best way to figure out how to write off your new car for this upcoming tax season is to speak with a licensed tax representative. You can speak to our dealership about getting a new car because we sell cars to the local community, and we love helping our customers to get a great deal. We can help you along in this process.
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