CREATING FINANCIAL FLEXIBILITY ONE DEALER AT A TIME
Tax Depreciation Benefits of Leasing Explained
Murray Doig & Eyo Toe | June 11, 2021
Depreciation tax benefits are one of the well-known benefits of leasing… but how exactly does it work? The image above shows a comparison of taxable income for an LHPH Dealer and a Non-LHPH Dealer. In the example, a Non-LHPH dealer who had a total of $2.5MM in revenue would pay taxes on the entire amount. An LHPH dealer who accumulated the same amount in revenue has a much smaller dollar amount of taxable income due to the depreciation expense. In this case, the taxes paid are 20% of the taxable income saving the LHPH dealer $400K in taxes just for the one particular year! Always consult with your CPA on how to maximize your depreciation benefits.