For companies that require trucks...Buy or lease?

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February 11, 2024

by a searcher from University of Pennsylvania - The Wharton School in Tampa, FL, USA

Was wondering, for companies that require trucks (pest control, lawn, HVAC, etc.) What is the best way to go about it whether that be buying or leasing? I know there are different pluses and minuses for each but wanted to see if there is a consensus.

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commentor profile
Reply by a professional
from University of Miami in New York, NY, USA
Hello there - If you re assembling a fleet, leases are typically tax deductible as a straight expense. In some instances, costs can be capitalized, but if you are buying, say, 4-5 delivery vans, those leases and the maintenance/upkeep are going to be straight expenses, not depreciation.

The major difference here, is the ability to take accelerated depreciation on the owned assets. That is, however, more or less a short term benefit in the year of acquisition. If you are going to have a banner year in that first year of vehicle ownership, then maybe this is the way to go. It's a balancing act here for accounting purposes; you have to literally do the math and ascertain what works better.

Just as an FYI - I'm a tax lawyer, and not a CPA. The math ought to be run by your accounting team, but I'm happy to assist on helping you develop a legal/business strategy around this. I can be reached at###-###-#### ; redacted
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Reply by a searcher
in Atlanta, GA, USA
my $.02 would be to buy a used truck to start with. In my geography (southeast) they are plentiful and competitively priced, but I can't speak to the northeast market. I would imagine there's less supply. Also, it might make a difference if you're looking at more than one - if you need five trucks, for example, you might be able to leverage that into a deal (that could push the scales towards an advantage to leasing). I think there is a scenario where leasing makes sense, I just don't know what it is - I've never liked the concept. I am aware of my bias here, so I'll be interested to see what others say.
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