Can I Claim a Car Lease Tax Deduction?
I own a business that requires me to travel extensively by car. If I lease a new car, will I be able to deduct the lease payments for the car from my taxes as a business expense?
In most circumstances, yes. If you lease a new car for use in your business, you will probably be able to deduct the lease payments from your taxes as a business deduction. However, you need to be careful and keep track of all the miles you spend in the car and whether the miles traveled are for business or personal reasons. If you spend 60% of the miles traveled in the car on business, and 40% for personal use, you can only deduct 60% of the lease payments from your taxes as a business expense.
You may read the above and be thinking this is simple, but the United States Tax Code never makes life that simple. For example, if you needed to make a down payment on the car before driving it off the lot, you cannot simply deduct this down payment from your taxes right away. Instead, the deduction for the down payment must be spread over the life of the car. In addition, if the car cost more than $18,500 (2009 tax year), you may have to reduce the amount of lease payments you claim as business expenses. You will probably want to hire a tax person to help you prepare your taxes if you are planning on claiming a car lease tax deduction.