A Honda lease offers a few advantages, including lower monthly payments than a comparable loan and some covered maintenance and repair services. With tax season approaching, you may wonder whether your lease also offers tax benefits. While we’re not accountants here at Honda of Grays Harbor, we know a bit about this subject.
Who Can Write Off Lease Payments
Unfortunately, not everyone can write off lease payments. Even if you use your car to drive to the office daily, you probably can’t write off its cost.
Instead, write-offs are for business owners who use their vehicles for their business. If you own your own company and frequently use your vehicle for client meetings, service calls, deliveries, and the like, you may want to talk to your accountant about those lease payments come tax time. However, there are a few limitations to be aware of.
How it Works
You usually cannot write off the entire cost of your lease. Unless the car is strictly used for business, you will have to determine how often a leased vehicle is used for business and how often a car is used for personal matters.
The best way of doing this is to track your mileage. If you drive 15,000 miles in a year, make sure to separate personal and business miles. Then you can determine which portion of your ownership expenses can be written off.
For example, if you break down that 15,000 miles and find that you drove 12,000 miles for business and 3,000 miles for personal matters, you used your car for business 80% of the time. From there, you and your accountant can choose the best method of accounting for car-related expenses on your tax return, of which there are several.
If you have more questions about Honda leases or our lineup of new vehicles, talk to our Western Washington Honda dealers. We’re more than prepared to help you with all of your automotive needs.
