Equipment financing Conserves cash with the maximum tax benefits as a lease.
What happens at the end of the lease?
Operating leases require the equipment to be returned to the lessor at the end of the lease. Some leases have a $1.00 purchase option or a guaranteed purchase amount (usually 10%). Other leases have a "Fair Market Value" purchase agreement where the amount is its fair market value at the end of the lease.
Are my monthly rental payments tax deductible?
$1.00 purchase option leases are deductible as a capital purchases. Fair market value and operating leases may be written off for the full monthly payment amounts as an expense. Consult your accountant.
What interest rate am I paying?
There is no interest on a lease – it is a rental payment. If the difference between the equipment cost and the monthly payment was "interest", then this would vary with the term, the cost and the lease buyout residual.