English
SpanishCan I Write off Vehicle Payments as a Business Expense?
If you’re an employee that has a business vehicle, chances you may be able to write off your vehicle payments based on the purchasing method of the car. The experts at Indy Car Financing have some important information on whether or not you can write off vehicle payments as a business expense, so read on to find out how.
Financed Vehicles
Loan payments on financed vehicles can’t be written off as a business expense, but the interest on a loan can be deducted by a business in the business’ name. There is also a deduction that can be made for the amount of depreciation on a vehicle incurred during the financing term. The depreciation amount to be deducted must be allowed by the tax rules for vehicles owned by a business, and it is possible to write off vehicle payments for a financed car based on its depreciation.
Closed-End Leases
A closed-end lease is a solid option for businesses that want to purchase a vehicle with retail financing. Since closed-end leases offer lower payments and a fixed residual value at the end of a lease term, writing off vehicle payments is a little different. The bottom line is that your business can write off a payment that’s proportional to a vehicle’s business use. For example, if the vehicle is used for business 80 percent of the time, then 80 percent of these lease payments can be written off.
TRAC Lease
A TRAC lease, or terminal rental adjustment clause lease, is an open-end lease used to finance cars that have been bought by a business for business use exclusively. A TRAC lease tends to provide a bit more freedom than a closed-end lease and is used to finance the business purchase for a variety of vehicle types ranging from commercial models to passenger cars. Since TRAC leases are considered off balance sheet expenses, you can write off vehicle payments as a business expense.
Indy Car Financing Can Answer Your Auto Financing Questions
If you’re thinking of writing off car financing related expenses, make sure to check with your tax consultant for all the details. But if you have any questions about the different financing methods for writing off vehicle payments as an expense, you can contact Indy Car Financing to speak with one of our professionals. Our number is 855-468-6215.