In 2001, the deduction limit for vehicle leasing costs was increased to $800 per month plus applicable sales taxes. Since this increased limit applies only to leases entered into in 2001, you may wish to renegotiate your existing lease to take full advantage of the $800 limit.
This deduction limit for leasing costs can be reduced for vehicles with a manufacturer’s original suggested retail price in excess of approximately $30,000 (before federal and provincial sales taxes). Leasing a used vehicle does not circumvent these rules. It is the original manufacturer’s suggested retail price that affects the deduction limit, not necessarily the purchase price of the vehicle.
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