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?
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
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..