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Paul R.
Paul R.
Orange, NSW
2 Likes
0 Followers
Q:

Hi. i am buying a small business. Is is best tax wise , to get a business loan,or pay cash for the business , and get a loan for the vehicle required so i can claim depreciation?

last week

Responses

Hi Paul

Firstly congratulations on your decision to buy a business and all the best of luck with the venture. There are so many things in play when it comes to your question but I will keep it simple.

You would be able to claim the depreciation for a business vehicle irrespective of it being purchased outright or via finance.

If you have the funds its always best to buy a business outright as interest on the loan is claimable but to claim the interest you have to pay the interest. So why pay the interest when you have the funds to buy the business outright.

Loan for business vs loan for motor vehicle - This decision would depend on the interest rate for the finance. Whichever mode of finance gives you the lowest rate should be used.

Hope this helpd

last week

Thanks Suresh, let me throw this into the mix.. So the business is lets say $ 130.000. I have a mortgage of $270.000 (house value is $540.000. I have savings of $200.000..What is best to do with my savings ? put it on the mortgage, or buy the business.. Or invest elsewhere..

Comments

I am not a financial planner so I can't advise where to invest and where not to invest. For your situation specific guidance you should talk to a financial planner.

Having said that, if I was in your position, I would do the following:
1. Pay off as much as possible in the mortgage as that debt is not tax deductible
2. Borrow to buy the business as the interest would be tax deductible given you borrow the funds and invest them in your business

Again I am neither a financial broker nor a financial planner so this is general advice only and you should consult a financial planner for any investment advice specific to your particular situation.

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