How do we decide to buy a car or leasing a car? Today I gonna talk about some key parts of the leasing or buying a car. So Let’s start.
Buying A Car
If you plan to buying a car for the business you own, you can’t allocate 12 months of depreciation in the same year. Monthly depreciation can be calculated from the date of purchase of the car until the end of the year and only this figure can be demonstrated as an expense. Let us also remind you that the income tax you pay when buying the vehicle can not be offset.
When you purchase a vehicle for your business, you can deduct the vehicle price from the income tax base. However, you cannot show the motor vehicle tax (MTV) as an expense to pay for the vehicle. When you want to sell the car also when you first purchase expenses for showing the sales as income is sending to your house and you face an additional tax comes out.
Car Rental , Leasing A Car
Let’s imagine you’re leasing the same car instead of buying it. The first benefit to your business is that there will be no bulk money out of your capital. Thus, you can invest in the money you will spend to buy the car. You can deduct all the fees you will pay to the car rental company from both the VAT and the income tax base. This means that the rental will provide you with a tax advantage as well as a lump sum output.
When the car you hire gets in an accident, it’s not your responsibility to pay for it. More importantly, when the vehicle is repaired, the rental company prevents you from being victimized by providing you with a replacement vehicle. When you choose to leasing a car instead of buying it, the costs of motor vehicles such as tax, periodic maintenance, battery changes or insurance costs are far from you.
Which option is more advantageous is fully linking to your business’s profitability status and tax base. The purchase of the car provides an advantage from income and corporate taxes, while saving the car from burdens such as rent, motor vehicle tax and Value Added Tax. At this point, the decision is entirely yours.