What is a $1 buyout equipment lease?

It is a lease with a nominal purchase option at the end — often $1 — so you are treated like the owner for tax purposes in many cases. Payments usually amortize the full equipment cost plus finance charges, similar to a loan. Your lessor and CPA classify the contract; LoanHelp does not.

What is an FMV lease?

A fair-market-value (FMV) operating lease keeps title with the lessor. You make lower monthly payments than a loan but typically return the asset, renew, or buy at fair market value at term end. Section 179 generally does not apply to you as lessee on a true operating lease — see IRS Publication 946 with your CPA.

Does Section 179 apply to a financed purchase?

When your business is treated as the owner and the property qualifies, a financed purchase placed in service in the tax year may qualify under 26 U.S.C. § 179, subject to limits in 26 CFR § 1.179-1 and IRS Pub. 946. LoanHelp does not provide tax advice.

$1 Buyout vs FMV Lease vs Equipment Loan

Updated Oct 23, 2026 · LoanHelp editorial team · Editorial policy · Not financial advice

A $1 buyout lease usually pays off the full equipment cost and leaves you as the owner for tax purposes in many structures. An FMV operating lease keeps title with the lessor and lower payments, but you generally do not own the machine unless you buy at fair market value later. An equipment loan is straightforward ownership with a lender lien.

Run your numbers

Use the equipment lease vs loan calculator with quotes from lessors and banks you are comparing.

Illustrative example

Illustrative example — not a quote or tax advice.

A $80,000 machine with $8,000 down, 60-month term, and 8.5% illustrative APR on a loan or $1 buyout produces about $1,477 per month and $96,631 total paid including down. An FMV lease quoted at $1,050 per month pays about $63,000 over the same term without automatic ownership.

Section 179 and ownership

Financed purchases and many capital leases may qualify when placed in service — see 26 CFR § 1.179-1, IRS Publication 946, and our Section 179 & financing guide. FMV operating leases usually do not let the lessee elect Section 179 on the asset.

Common questions

What is a $1 buyout equipment lease?: It is a lease with a nominal purchase option at the end — often $1 — so you are treated like the owner for tax purposes in many cases. Payments usually amortize the full equipment cost plus finance charges, similar to a loan. Your lessor and CPA classify the contract; LoanHelp does not.
What is an FMV lease?: A fair-market-value (FMV) operating lease keeps title with the lessor. You make lower monthly payments than a loan but typically return the asset, renew, or buy at fair market value at term end. Section 179 generally does not apply to you as lessee on a true operating lease — see IRS Publication 946 with your CPA.
Does Section 179 apply to a financed purchase?: When your business is treated as the owner and the property qualifies, a financed purchase placed in service in the tax year may qualify under 26 U.S.C. § 179, subject to limits in 26 CFR § 1.179-1 and IRS Pub. 946. LoanHelp does not provide tax advice.
Does LoanHelp approve equipment leases or loans?: No. LoanHelp is an independent commercial financing referral service, not a lender or broker. We share one financing inquiry with one partner, who sets eligibility and documents.

LoanHelp is an independent commercial financing referral service, not a lender or broker. We share one financing inquiry with one partner, who may contact you about options. We do not approve, arrange, or guarantee financing.

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