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PODCAST: Understanding the “Tax Lease” with Brett Allen

Equipment Financing

Enjoy the Podcast:

What is a Tax Lease?

Simply speaking, a tax lease is any lease in which the lessor–the financier–is considered the owner of the leased equipment for federal income tax purposes. With a non-tax lease, the lessee–the business that received financing and is probably using the equipment–is considered the owner for tax purposes.

Why Would You Want A Tax Lease?

That depends largely on the way you keep your books and write off your business expenses. In the best case scenario, you could write your entire monthly lease payment off your taxes if you got a tax lease. To get the most bang for your buck (and to make sure you’re crossing all your Ts), you’ll want to consult your accountant.

Since tax leases fall under the umbrella of operating leases, you’ll also want to consider the type of equipment you’re leasing. An operating lease is usually best for equipment that you aren’t certain you want to own, often because it depreciates quickly or becomes obsolete in a short period of time. On the other hand, if you think you want to own the equipment, a capital lease may be a better option.

Final Thoughts

If you encounter leasing jargon you’re unfamiliar with, don’t be intimidated–chances are it refers to an idea that is fairly accessible in plain language.

Brett Allen
Envision Capital Group LLC
949.553.9420 Direct
949.553.9421 Fax
888.779.6989 Toll-Free (Ext. 223)

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