Business Tax Write offs
One of the best Business tax write offs that a business can have when acquiring assets or obtaining funding is to finance through a lease.
In most cases, when leasing, the full payment can be written off, with an example below.
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A customer has secured a $52,000 lease, either for the acquisition of an asset, or through a real estate leaseback.
The following cost of financing is with regard to funding for $52,000, for review.
A lease may be written of 100% and can return approximately $10,234 in Tax savings to you, as follows:
60 payments, $1,319.09 per month plus tax = $79, 145
Tax Write Off: $79,145 to be written off $100%
$79,145 X .28 (National Average)
= $22,160 in Tax Savings
60 Monthly payments of $1,319.09 per months for $79,145
– $22,160 (You recover Tax Savings) – $52,000 (You recover in funding) = $4,985 (Total cost not recovered)
$4,985 % 5 Years = $997 Per year total cost not recovered
APR – Annual Percentage Rate
$997 / $52,000 = 1.9% Effective APR per year
Cost per month
$997 / 12 = $83/Mo
In business, dollars invested wisely can multiply themselves many times over, and the $83 per month becomes almost insignificant in light of the potential the investment can provide based on even a modest profit margin in the use of funds.
As a result, employing leasing, either via the equipment leaseback or real estate leaseback method, or to obtain capital, is a cost effective approach for businesses to employ.