You bought out your lease — what happens to your deduction?

What ends the moment you own the car

Publication 463's lease rule is explicit about scope: "If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period" — including renewals. See leased vs. owned for the full lock-in rule. That rule is written around a car you're leasing. Once you exercise a buyout and hold title, you're not leasing anymore — there's no more lease period left for the lock-in to apply to. Nothing in Publication 463 suggests the lock-in reaches backward or forward past the point of actual ownership.

One vehicle, not two — your log doesn't split

This is different from switching to a replacement car mid-year (see changed vehicles mid-year, which covers a genuine swap and does require an odometer reading at the changeover). A buyout is the same VIN before and after — you're changing who owns it, not what you're driving. There's no reason to start a new log or record a changeover odometer reading for logging purposes; keep recording each trip's date, miles, destination, and purpose as one continuous record. The 2026 split rate — 72.5¢ per mile January 1–June 30, 76¢ from July 1 — applies to this vehicle's miles by trip date exactly as it always has, buyout or not.

What's genuinely unclear: basis and the election going forward

Here's the honest gap. Publication 463's basis rule for an owned car says: "To figure your unadjusted basis, begin with your car's original basis, which is generally its cost." A buyout price is, on ordinary tax-basis principles (see Publication 551, Basis of Assets, which Publication 463 itself points to for basis questions it doesn't fully answer), the natural starting cost for a car you now own — not the sum of the lease payments you made before you owned it.

What Publication 463 does not say is whether the depreciation portion baked into the standard mileage rate during your leased years (see how that depreciation component works) reduces anything once you own the car. The plain reading is that it shouldn't — that depreciation component reduces the basis of a car you depreciate, and during the lease you had no ownership basis to reduce. But that's our reasoning from the general rule, not a sentence Publication 463 states about buyouts specifically. If the buyout price and the treatment of your pre-buyout years matter to your return, this is worth a tax professional's direct confirmation before you file — it's exactly the kind of transition Publication 463 leaves silent on.

The election from the point you own it

From the buyout date forward, the car is functioning like any other car you own: the standard first-year choice — standard mileage or actual expenses, made by your return's due date and not revocable for that year — governs it going forward. See standard mileage vs. actual expenses for that full rule, including what disqualifies you from standard mileage.