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You might find that you'll receive a bigger tax deduction if you write off the mileage instead. I'm in real estate, and everybody I know writes off the mileage. Of course, my interest rate was very low, on a very low balance, but my associates likely pay much higher rates, and they still write off the mileage.

Years ago I leased vehicles because I could write off the entire lease payment. So you might want to ask your accountant if there is a way that your corporation can lease the vehicle from you, and then you could write off the lease payments (if the tax laws haven't changed).

For example, a lease payment of $500 per month would give you a tax deduction of $6,000 against corporate income. Whereas interest at 5% on a $40,000 loan is about $2,000 a year. Mileage at 37.5 cents a mile on 15,000 miles is $5,625. (The mileage rate changes every year, and I'm not sure what it is for this year.) So I would think you would need to figure out if you need the deduction against corporate income or personal income.

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