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Can I deduct cost of car lease with only the leased car?

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  • Can I deduct cost of car lease with only the leased car?

    I have small office. I work using my car which I bought during fellwoship. Can I sell it and lease a car with my corporate account and deduct the expenses? Me my wife drives her own car that’s under her own name.

  • #2
    If you use your car for business use you can pay the lease as a business expense.  However using the car to commute to work is not considered a valid business expense.  If you use the car for both business use and for commuting, you can pay for it as a corporate expense, and then track the mileage for business vs personal use.  You will then have to declare the "income" from the % personal use of the vehicle and then pay income taxes on that amount.

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    • #3
      Good question for your CPA.

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      • #4
        Audit red flag risk, so take it as you and CPA agree is a reasonable course -- a LOT of area of grey and you won't know until audit time whether your POV matches the auditor of the case.

        You'll get a wide range of answers I'm sure.

        The clear cut deduction would be use between place of employment and need to use the vehicle in between stops that are not the usual place of business.  eg travel from office to do business across town.  That travel distance is deductible.

        The % cost of the lease itself varies greatly and how it's written down is even more fuzzy.

        Leasing a Tesla X  vs Smartcar for single person business use that's not hauling anything in metro downtown area with congested parking -- may not go over well at time of audit.

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        • #5
          How precise should you be when tracking mileage? meaning, do you need to write on a daily basis where you go and the amount of miles you drive? I started tracking miles using the Intui Self Employed app, but only started doing it last month, wondering what to do about the rest of this year when it comes the time to do my taxes.

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