Did you Lease or Buy ?
04-25-17, 06:19 PM
#121
Driver School Candidate
Join Date: Nov 2016
Location: Califonia
Posts: 2
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Buy
Anyone else get annoyed when people ask you that question while talking about your car? I dont know I just think that not anybody's business...Also how about when your doing some cosmetic work on a car you will have for 3+ years and people chuckle and say Why you doin that it's a lease!?
04-25-17, 06:20 PM
#122
Lexus Fanatic
Just to be clear on the tax situation. So you can deduct a vehicle as a business expense whether its a lease or a purchase. When its a lease its a lot more straightforward, the % business use of the vehicle cost for the year is deductible. So, lease payments, fuel, insurance, car washes, maintenance, anything you buy for the vehicle is tax deductible.
When you own the vehicle you can write off any loan interest, as well as all expenses, but you have to depreciate the vehicle. This generally provides less of a deduction, and it complicates it if you sell, do you have to recapture depreciation, etc.
Now, the caveat there is if its a truck weighing over 6,000 lbs GVWR. Thats not curb weight, thats gross weight, so fully loaded. Anything Grand Cherokee sized, X5, the GX and LX Lexus (not the RX), Range Rover and Range Rover Sport, Land Rover Discovery, etc you can take (for now) a bonus depreciation that allows you to step up much of if not all the depreciation in the first year. BUT, you have to buy and cannot lease. So potentially, that $100,000 RR could net you a $60k deduction this year, $30k next year, etc, or that Jeep Grand Cherokee Summit at $60k might get you a $60k deduction in the first year. So, if you like SUVs and can write a vehicle off for business thats something to think about when deciding to buy or lease.
For instance as Mike said, I lease for business. If I were to get a big SUV though I would have to buy it for the tax savings.
When you own the vehicle you can write off any loan interest, as well as all expenses, but you have to depreciate the vehicle. This generally provides less of a deduction, and it complicates it if you sell, do you have to recapture depreciation, etc.
Now, the caveat there is if its a truck weighing over 6,000 lbs GVWR. Thats not curb weight, thats gross weight, so fully loaded. Anything Grand Cherokee sized, X5, the GX and LX Lexus (not the RX), Range Rover and Range Rover Sport, Land Rover Discovery, etc you can take (for now) a bonus depreciation that allows you to step up much of if not all the depreciation in the first year. BUT, you have to buy and cannot lease. So potentially, that $100,000 RR could net you a $60k deduction this year, $30k next year, etc, or that Jeep Grand Cherokee Summit at $60k might get you a $60k deduction in the first year. So, if you like SUVs and can write a vehicle off for business thats something to think about when deciding to buy or lease.
For instance as Mike said, I lease for business. If I were to get a big SUV though I would have to buy it for the tax savings.
04-25-17, 06:21 PM
#123
Lexus Fanatic
In the U.S., as I understand it, only home-equity interest on a car loan is deductible, not that from a general car loan...though Steve also brought up some other related points. That is why, IMO, it is foolish, in most circumstances, to take a loan out on your house to finance a car.
We'll see what's stuck into any tax-reform package that comes up, though.
Last edited by mmarshall; 04-25-17 at 06:24 PM.
04-25-17, 06:25 PM
#124
Lexus Fanatic
.....but your history, with just 1 post, shows a join date of November 2016.
04-25-17, 06:27 PM
#125
OK...sorry if I bought it up unnecessarily, but I didn't have time to go back through and re-read all 120 posts. You're correct on the (stipulations) part, of course, since it obviously has to be according to the IRS code.
In the U.S., as I understand it, only home-equity interest on a car loan is deductible, not that from a general car loan...though Steve also brought up some other related points. That is why, IMO, it is foolish, in most circumstances, to take a loan out on your house to finance a car.
We'll see what's stuck into any tax-reform package that comes up, though.
In the U.S., as I understand it, only home-equity interest on a car loan is deductible, not that from a general car loan...though Steve also brought up some other related points. That is why, IMO, it is foolish, in most circumstances, to take a loan out on your house to finance a car.
We'll see what's stuck into any tax-reform package that comes up, though.
04-25-17, 06:27 PM
#126
Lexus Fanatic
The net result of my ability to write the vehicle off my taxes, my lease payment on the LS is $950 a month, essentially it costs me about $400 a month to drive it. ~ $550 a month comes back to me in the form of reduced taxes.
04-25-17, 06:34 PM
#127
Just to be clear on the tax situation. So you can deduct a vehicle as a business expense whether its a lease or a purchase. When its a lease its a lot more straightforward, the % business use of the vehicle cost for the year is deductible. So, lease payments, fuel, insurance, car washes, maintenance, anything you buy for the vehicle is tax deductible.
When you own the vehicle you can write off any loan interest, as well as all expenses, but you have to depreciate the vehicle. This generally provides less of a deduction, and it complicates it if you sell, do you have to recapture depreciation, etc.
Now, the caveat there is if its a truck weighing over 6,000 lbs GVWR. Thats not curb weight, thats gross weight, so fully loaded. Anything Grand Cherokee sized, X5, the GX and LX Lexus (not the RX), Range Rover and Range Rover Sport, Land Rover Discovery, etc you can take (for now) a bonus depreciation that allows you to step up much of if not all the depreciation in the first year. BUT, you have to buy and cannot lease. So potentially, that $100,000 RR could net you a $60k deduction this year, $30k next year, etc, or that Jeep Grand Cherokee Summit at $60k might get you a $60k deduction in the first year. So, if you like SUVs and can write a vehicle off for business thats something to think about when deciding to buy or lease.
For instance as Mike said, I lease for business. If I were to get a big SUV though I would have to buy it for the tax savings.
When you own the vehicle you can write off any loan interest, as well as all expenses, but you have to depreciate the vehicle. This generally provides less of a deduction, and it complicates it if you sell, do you have to recapture depreciation, etc.
Now, the caveat there is if its a truck weighing over 6,000 lbs GVWR. Thats not curb weight, thats gross weight, so fully loaded. Anything Grand Cherokee sized, X5, the GX and LX Lexus (not the RX), Range Rover and Range Rover Sport, Land Rover Discovery, etc you can take (for now) a bonus depreciation that allows you to step up much of if not all the depreciation in the first year. BUT, you have to buy and cannot lease. So potentially, that $100,000 RR could net you a $60k deduction this year, $30k next year, etc, or that Jeep Grand Cherokee Summit at $60k might get you a $60k deduction in the first year. So, if you like SUVs and can write a vehicle off for business thats something to think about when deciding to buy or lease.
For instance as Mike said, I lease for business. If I were to get a big SUV though I would have to buy it for the tax savings.
edit: damn, the GLS is just under the GVWR requirement.
Last edited by ragingf80; 04-25-17 at 06:41 PM.
04-25-17, 06:39 PM
#128
Lexus Fanatic
Great info, this is just the clarification I was hoping would surface. The bonus depreciation on trucks is something my accountant mentioned, but I did not know it could be applied to a SUV. Somehow I pictured open bed trucks only, and I would consider a nice Raptor except it's not exactly practical! Knowing that I consider a MB GLS is certainly food for thought.
My business partner bought a Grand Cherokee using this and I have many coworkers who are in similar tax situations who have bought X5s, GX460s, Range Rovers, Mercedes MLs, GLs, etc.
I've not done it because I really didn't want an SUV...my accountant screams and yells at me every time I get a new car because it isn't a huge SUV and I can't take advantage of this, but its another example of putting what I want above what may make the most "financial sense". Yeah, I'd get a huge deduction but I'd be driving a huge SUV I don't want for 5 years.
04-25-17, 09:05 PM
#129
My issue with people who tout Suze Orman or any of these other "gurus" is that they don't understand there is not only one way forward. You do not have to deny yourself things you want in order to be able to be financially responsible, you just have to be realistic about what you want, make sure you really want that and make choices. You can't do it all. There are things I would "like" to have, I'd like to have a boat. I'd like to buy a vacation home, I'd like to have a huge primary home. However, I don't "really want" this things, so I prioritize what I truly do want. I would be unhappy driving an older car, I would be unhappy keeping a car a long time...so I don't do that. Whatever car I buy or how I buy it does not impact my ability to invest and save, I don't know if I just make a lot more money than most people were talking about, but I really don't think that's the case.
What I am not going to do is work hard and earn a great living to live like a pauper so money can build up someplace and be left over when I die. I don't understand that. My kids will have every opportunity in life, great upbringing, loving parents, great experiences, great education...but they will then need to go make their own way in the world. That's how it was for me, my parents generation made their own way without many of the benefits I had when I was a kid. They'll inherit what's there when we're gone but hopefully that will be after they're already adults and are already on their way towards building their own lives and security.
Charity? I have my own problems lol. Sorry to be selfish, but I have one life and I'm going to live it for my family and for myself first.
What I don't understand is if you're never going to spend any money, what's the point of saving all this money to just sit there? So you can not work? I'm going to be retired at some point also, on track for that. If you're not spending any money, what are you going to do when you're retired?
What I am not going to do is work hard and earn a great living to live like a pauper so money can build up someplace and be left over when I die. I don't understand that. My kids will have every opportunity in life, great upbringing, loving parents, great experiences, great education...but they will then need to go make their own way in the world. That's how it was for me, my parents generation made their own way without many of the benefits I had when I was a kid. They'll inherit what's there when we're gone but hopefully that will be after they're already adults and are already on their way towards building their own lives and security.
Charity? I have my own problems lol. Sorry to be selfish, but I have one life and I'm going to live it for my family and for myself first.
What I don't understand is if you're never going to spend any money, what's the point of saving all this money to just sit there? So you can not work? I'm going to be retired at some point also, on track for that. If you're not spending any money, what are you going to do when you're retired?
04-25-17, 11:00 PM
#130
Just to be clear on the tax situation. So you can deduct a vehicle as a business expense whether its a lease or a purchase. When its a lease its a lot more straightforward, the % business use of the vehicle cost for the year is deductible. So, lease payments, fuel, insurance, car washes, maintenance, anything you buy for the vehicle is tax deductible.
When you own the vehicle you can write off any loan interest, as well as all expenses, but you have to depreciate the vehicle. This generally provides less of a deduction, and it complicates it if you sell, do you have to recapture depreciation, etc.
Now, the caveat there is if its a truck weighing over 6,000 lbs GVWR. Thats not curb weight, thats gross weight, so fully loaded. Anything Grand Cherokee sized, X5, the GX and LX Lexus (not the RX), Range Rover and Range Rover Sport, Land Rover Discovery, etc you can take (for now) a bonus depreciation that allows you to step up much of if not all the depreciation in the first year. BUT, you have to buy and cannot lease. So potentially, that $100,000 RR could net you a $60k deduction this year, $30k next year, etc, or that Jeep Grand Cherokee Summit at $60k might get you a $60k deduction in the first year. So, if you like SUVs and can write a vehicle off for business thats something to think about when deciding to buy or lease.
For instance as Mike said, I lease for business. If I were to get a big SUV though I would have to buy it for the tax savings.
When you own the vehicle you can write off any loan interest, as well as all expenses, but you have to depreciate the vehicle. This generally provides less of a deduction, and it complicates it if you sell, do you have to recapture depreciation, etc.
Now, the caveat there is if its a truck weighing over 6,000 lbs GVWR. Thats not curb weight, thats gross weight, so fully loaded. Anything Grand Cherokee sized, X5, the GX and LX Lexus (not the RX), Range Rover and Range Rover Sport, Land Rover Discovery, etc you can take (for now) a bonus depreciation that allows you to step up much of if not all the depreciation in the first year. BUT, you have to buy and cannot lease. So potentially, that $100,000 RR could net you a $60k deduction this year, $30k next year, etc, or that Jeep Grand Cherokee Summit at $60k might get you a $60k deduction in the first year. So, if you like SUVs and can write a vehicle off for business thats something to think about when deciding to buy or lease.
For instance as Mike said, I lease for business. If I were to get a big SUV though I would have to buy it for the tax savings.
All my cars are deducted under business, at a % of each. And every expenses related to the cars are written off. I had a new Sienna leased at one time, my accountant said: ' get rid of this, you can do so much better ' couple months later I got my first 7 series and never looked back.
04-26-17, 05:04 AM
#131
Lexus Fanatic
Obviously this question is on every car forum, and has the same mixed results. One point I always liked was what would a transit authority do, and why (we're talking 1.3 bil)? They're a business obviously to make money, so they would use every advantage available to them.....
04-26-17, 05:37 AM
#132
Lexus Fanatic
A transit authority? Totally different goals and circumstances than an individual person.
04-26-17, 06:17 AM
#133
Lexus Fanatic
Hey would you believe this, I pulled a Benjamin Franklin out of thin air this AM.....logged into my cable account, went to the page where you would update your choices. It reflected a $4 discount with our existing 2 set top boxes (didn't have this discount prior). The tab on the top reflected a "new" plan at $4/mo. less, and stated no change to the recent 2 yr. contract. So what the hey I checkout and place the order, which would take effect next billing cycle. This lowers my bill by $4.48/mo. times 23 remaining months, all for doing nothing....why do I feel good about $102 and change? Because I want to minimize anything and everything I'm paying to the phone/cable co, out of $16/mo in taxes and fee, only $5 are state mandated and legit.....lol
04-26-17, 06:56 AM
#134
Pole Position
Terrible idea. Calculate the cost of a lease for let's say 9 years. Add the interest rate, down payment etc. Then compared to owning the Camry. Currently Toyota is offering zero percent on financing. Let's say 12k per year for both the lease camry and the financed Camry. You would probably get abut $5K for the Camry at KBB book value. Leasing is such a horrible idea.
04-26-17, 06:58 AM
#135
Pole Position
I think everyone has different goals and financial situations. For some it makes sense to lease and for others it doesn't. Whatever decision a person makes it should be respected.
I think sometimes leasing gets a bad wrap because there are a lot of people out there with their $1K/mth lease, but still live with mommy and daddy.
I think sometimes leasing gets a bad wrap because there are a lot of people out there with their $1K/mth lease, but still live with mommy and daddy.