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What Is A Tax Lease? The Pros & Cons Of True Tax Leases

With a tax lease, the lessee retains ownership of the equipment for tax purposes. Is a tax lease right for your small business?

    Chris Motola
  • Last updated onUpdated

  • Erica Seppala
  • REVIEWED BY

    Erica Seppala

    Editor & Senior Staff Writer

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Key Takeaways
  1. A tax lease is an operating lease where the lessor retains ownership for tax purposes, allowing the lessee to claim lease payments as a business expense.
  2. Tax leases offer benefits like easier bookkeeping and no disposal concerns, but they don't provide ownership tax credits and aren't suitable for long-term equipment needs.
  3. Unlike capital leases where ownership transfers to the lessee, tax leases involve short-term use with the lessor retaining ownership. This makes them less suitable for equipment intended for long-term use.
Chris Motola

Chris Motola

Expert Contributor at Merchant Maverick
Chris has been writing about small business topics since 2003. He has been featured in Fox Business, ABC News, Yahoo Finance, GoBankingRates, Newsweek, BizJournals, and other publications. He has a Bachelor’s of Arts in English Writing Arts from SUNY Oswego, and a Masters of Science in Interactive Media from the University of Central Florida. He currently resides in the Hudson Valley region of New York.
Chris Motola
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Chris Motola

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