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With high farm incomes buying was the best thing for many US farms, to
deduct the expense quicker. It is all about tax laws, etc. Not sure about
Canada.
Most leases require high minimum hours of annual use, and may or may not be
covered by warranty. No easy answer here, as one size does not fit all.
 

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Depends on what the item is. Have leased buildings and bins because it allows it to be expensed quicker, but it comes with a cost too. I don't like leasing machinery because you don't get equity built.

If you have the cash, and can manage the tax, it's generally better to buy the item outright.
 

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If your farm is not filing corporate tax there may be a advantage to leasing if the lease rate is low, preferably under 4%. Usually buying is the cheapest in the long run. Leasing might save some money in the short term but will cost more money in the long run.
 

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I believe when it comes to banking financials, a leased item is not considered equity until the lease has finished and bought out which is 5 years down the road. When you purchase the Item outright it is considered equity immediately. Yes you are still building equity all the time but your bank will not see it that way.
 

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Everyone's situation is different in this regard. I've been doing this gig long enough to know that the good times don't roll on forever. Therefore I do not like to lease equipment, the reason is because I like to make the good years count so when the bad years come I don't have equipment payments.

On the other hand if your operation puts lots of hours on a machine (which I don't) in a year leasing may be a better option. This is just not a question that can be answered on a forum, everyones situation is just to different.
 

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I've been told by a few equipment salesman that they have only leased one or two pieces of equipment in the last few years. They said no one really does this around here. The tax advantage is nil on rolling equipment. There is a difference between rolling equipment and bins or buildings in Alberta. And if you need to lease a combine cause you can't afford a loan maby you should look at a older cheaper one anyways? That's why our equipment is used when we get it.
 

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Time to lease is when it looks like the used market is going to drop. Currently used combines are losing value like crazy. If you own you are losing money.

If you had leased at a good residual value your used value is locked in.

Leases generally cost more a interest rates are higher, but there are times that leasing comes out on top. The residual value is the important number to pay attention to.

Be very cautious leasing bins if you are going to retire in the next 15 years. The low cost buy out on the bins is the amount that goes on your CCA schedule and anything over that number when you sell them is recapture and taxed as income.
 

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To add to what Bud mentioned regarding leasing bins is the rates are terrible due to any real competition. National and Calidon do most of the leasing in Sask but their rates are 6% - 10%.

Recently, FCC told me that if they leased bins their rate would start with a 4.
 
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