You have decided to become self-employed and your new business or professional activity requires the use of a car? The question has surely crossed your mind as to whether leasing or buying is the most advantageous choice for your situation. Both options have their advantages and disadvantages, but the key to the answer lies in the use you wish to make of it.
AutoStudio 72, on the North Shore of Montreal in Mirabel, near Saint-Jérôme, Blainville, Terrebonne, Boisbriand and just a few minutes from Laval, helps you make your choice. With our dealership, you don’t need to have a good credit score: find your car in Mirabel thanks to our 3rd chance auto loan. A vast inventory awaits you, whether you are looking for a fuel-efficient car, an SUV or a rugged truck!
In addition to the generalities about buying and leasing, there are certain differences from a fiscal point of view that you should take into account. In both cases, the percentage of certain essential costs such as gas, oil, parking, etc. can be deducted in the same way.
Where it differs is when we talk about deductions related to the cost of the car itself, the percentage of costs related to business use being deductible. In the case of leasing, these costs are deductible up to a maximum of $800 per month, plus the deduction of the Harmonized Sales Tax (HST) for a maximum annual total of $9600.
In the case of leasing, however, there is no capital cost allowance (CCA) applicable, since you do not own the property. This is one of the main tax differences: purchased cars benefit from this additional deduction, compensating for the loss in value.
However, if you buy a luxury car, i.e. one that costs more than $30,000, the excess amount will not be eligible for CCA. If the amount is much higher than that, then it is better to lease; otherwise, you will suffer the depreciation of your car. Regarding CCA, 30% of the value of the car can be deducted; the interest on the new car is also tax deductible.
Note that the tax deductible amount for a leased car is calculated on the monthly payments, while it is calculated on the total cost of the new car.
In terms of monthly payments, it is well known that leasing costs less than a financing plan, so it can be a good option if you want to pay less. However, this depends on your usage: additional fees are usually charged to drivers exceeding the annual mileage limit of 24,000 km.
Of course, if you eventually dispose of the leased vehicle, you will suffer no loss, but no gain. For the purchased car, however, you will either have taxable gains (like an income) or losses that are tax-deductible. Also, if you like to change cars on a regular basis, leasing is probably the best choice for you.
In short, there are a few tax differences to consider when choosing between buying and leasing a car; it would be wise to make these calculations beforehand. Depending on your usage, the cost of the car, but also some personal preferences, the right answer to this question varies from person to person!
Whether for commercial or personal use, a large inventory of vehicles of different sizes awaits you: find the one that meets your needs! Our professionals will know how to help you and offer you a personalized financing plan, including 2nd and 3rd chance credit options. Take advantage of special prices, especially on cars on bailiff’s sale, which is exclusive to AutoStudio 72!
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