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I don't know where the idea of tax advantage came up. There are instances where you can deduct mileage, most commonly unreimbursed employee expense. But most just use the standard mileage rate. If you use the fully allocated cost method you can add depreciation and repairs to gas and insurance. But with leasing it would be lower, so the tax deduction would end up being less.
I don't know where the idea of tax advantage came up. There are instances where you can deduct mileage, most commonly unreimbursed employee expense. But most just use the standard mileage rate. If you use the fully allocated cost method you can add depreciation and repairs to gas and insurance. But with leasing it would be lower, so the tax deduction would end up being less.
Inclusion is almost nothing, however, meaning you write off much more than you could by buying.
For 2017 the depreciation limits assuming bonus depreciation applies (placed in service as a new vehicle, more than 50% business use) are:
$11,160
$5,100
$3,050
and $1,875 thereafter.
If you buy, your depreciation is capped at $19,000 over three years and you're looking at around 20 years to fully depreciate the car, which is kind of a long time to fully depreciate it. The point was people shouldn't get tax write-offs because they want to drive a S Class Mercedes instead of a Toyota Corolla.
If you lease you go buy exclusion limits. If you take BMW 530i that costs around $50,000 it's $539/month with $3,800 down. Do a 0 down and it's around $640/month or $7,680 a year. Fair market value is $53,945 less $1,000 lease credit and $1,271 dealer contribution or $51,674 which has inclusion values of 64, 140, and 209.
$7,680 - 64 = $7,616
$7,680 - 140 = $7,540
$7,680 - 209 = $7,471
If you lease over three years you can depreciate $22,627. It's actually higher as the fair market value reduces each year meaning the subsequent years would have less inclusion but not by that much.
The more expensive the car, the more the spread between lease and buy. The inclusion limits on a $100,000 car are only a couple hundred more dollars so you can take more than double the depreciation leasing a $100,000 car than buying it. It's much better to lease luxury cars used for business purposes.
For unreimbursed business expenses a lot of those cars aren't going to qualify for the $8,000 bonus depreciation the first year as they aren't being used more than 50% for business use which is even more reason to lease.
Or, as I said in an earlier post, if you have a business that is an LLC or corporation. Then you can write off most of your lease payments from your taxes.
As can sole proprietors or partnerships that are not incorporated.
I don't know where the idea of tax advantage came up. There are instances where you can deduct mileage, most commonly unreimbursed employee expense. But most just use the standard mileage rate. If you use the fully allocated cost method you can add depreciation and repairs to gas and insurance. But with leasing it would be lower, so the tax deduction would end up being less.
That refers to someone that owns their own business.
I don't know the ins and outs of it, but if the car has a GVWR of less than a certain amount, you can't depreciate it on the same advantageous schedule as you can a truck of full size pickup or large SUV...If you lease the car, you can expense the whole lease as a business expense.
"It went around the clock 3x...meaning it had 350,000+ miles "
A 5 digit odometer shows a max of 99,999, meaning if it went around the clock 3x you're at about 300,000.
So you can't write "meaning it had" 350K (perhaps English isn't your first language - in which case I apologize). It doesn't "mean" that at all.
If you meant to write "it went round the clock 3 and half times meaning it had 350,000+" .. well that's a case of you not being able to write, not me not being able to read.
If you meant to write "it went round the clock 3 and half times meaning it had 350,000+" .. well that's a case of you not being able to write, not me not being able to read.
I am glad you have to be so precise. The vehicle still went around 3x. Its not 2 or 4. I just wanted to point out the comment countering that cars today last longer. I stand you are reading too much into my comment.
Pay is getting cheaper yet vehicles are getting more expensive. Rents, Property Taxes, Utilities, I guess this is motivating more people to lease a vehicle, right? What have you seen?
Another trouble, though... -- The "Automotive Repair Conspiracy..."
I have noticed leasing becoming more widespread in that it's no longer just people leasing for the tax right off or because they want a luxury car that they don't want the high payments on or to maintain long term.
Now it seems people who would otherwise be shopping the low to midrange used market are often choosing to lease a new vehicle instead.
yes & no. Seems like a lot of people are treating their vehicles like disposable products.
Once a vehicle hit a 100K on the odo, people think its almost worthless. When the electronics go a little whacky, people just don't want to deal with it. All the airbags deployed? Oh, the car is totaled!
There are those of us who want a reliable car. They do not have a mechanic on speed dial. They are not married to a mechanic. They only have that one car to drive. If they have the money to purchase a new car, they are not going to ask your permission.
I have no problem with people who buy used cars or buy new and keep it until it disintegrates. I also don't have any problem with people who buy a car when the electronics "go a little whacky". And if you want to buy a new car and sell it after 4 years or so,
Or, as I said in an earlier post, if you have a business that is an LLC or corporation. Then you can write off most of your lease payments from your taxes.
You can do that with owning as well so it’s irrelevant.
As can sole proprietors or partnerships that are not incorporated.
You can deduct use of car as a business expense on personal taxes as well. No need to file any sort of business license paperwork.
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There are those of us who want a reliable car. They do not have a mechanic on speed dial. They are not married to a mechanic. They only have that one car to drive. If they have the money to purchase a new car, they are not going to ask your permission.
