Today TaxMama hears from Joel in New York with this question. “If I lease a car for business, say 80% business use, can I write off 80% of the down payment?”
Dear Joel,
People lease cars for business all the time. I wonder why no one has ever asked this question before?
Some of the TV commercials I’ve seen seem to call for substantial down payments. They make me wonder why anyone would bother to lease – especially when you can get such a good deal buying a car these days?
Back to your question. When the down payment is substantial, you might have to spread it over more than one year. See Publication 463, which says:
- “You must spread any advance payments over the entire lease period. You cannot deduct any payments you make to buy a car, even if the payments are called lease payments.”
Also, remember to compute the lease inclusion amount from the tables. You can find them on the Small Business Taxes and Management site’s auto expense pages.
https://www.smbiz.com/sbrl003.html
And remember, you can find answers to all kinds of questions about vehicle expenses and other tax issues, free. Where? Where else? At TaxMama.com.
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- IRS Publication 463 :: Chapter 4 – lease down payments
- Small Business Taxes and Management :: Depreciation & Lease inclusion Tables
