So in 12 months if you are bored with the leased option you've got $65k out of pocket. What are your options to get out of that closed lease? Can you sell it and walk? Do you need to find someone to take over? Are there penalties? Curious I've never leased or financed a car.
Would you be able to get out of the lease if you wanted to trade it in or sell it? Or do you need to find someone to take over the lease for you? How would your closed end lease work?
I mistakenly stated closed end lease. It is an open end lease. I can get out any time but picked the 60 month term. The agreed buyout is the $155k after 60 month. I also have an optional agreed buyout of 200k after 36 months. If I trade or sell, I must buy it at the agreed numbers and term. The point for me is the $2000 saving per month ($120k) for a extra cost of $20k over 60 months.
Car's fully paid for in cash (no financing either). No financial handcoughs, no worries. These are big boys TOYS, you lose a boatload of money. Knew that B4 and for me the fun was/is worth it. Also, wife'll benefit when I get thrown out of a curve... Best, Ulli
Agreed Ulli, but in the US there are all kinds of financial benefits to financing or leasing and it really is dependent on one's particular circumstance. We could debate if the policies that lead to these outcomes are good policies or not but there are in fact instances that using financing or leasing actually makes more sense than buying a vehicle outright.
Thought I bump this up since it's been awhile since the last post. I always Corp lease my vehicles 3 exotics all done that way and the reason: TAXES (California) you can write off 90% on the lease payments and the out of pocket (down payment) is amortize over 3 years. This is coming from my accountant. But there's a catch and here it is you HAVE to be able to justify the vehicle so I can see after reading this thread post and many others why some of you might want to go cash which is NOT wrong. However IF you're brining in 7 figures to high 7 figures you're gonna need some expenses that I can assure you unless you want to give money to the government. So if you own couple of restraunts yah that won't work or if you own a plumbing company or construction company that won't work either. In my case I'm in Wallstreet (Merchant banking and Investment banking which I deal face to face with Executive clients and trust me THEY roll up in Lambos & Ferraris or Bentley themselves and theirs are leased as well ( They tell me, and of course they have cash) so I can and been justifying reasoning for these toys. Also keep in mind that I DON'T take my cars out to clubs and whore around like some people do who never had an exotic. Of course from time to time on weekends I take her out to stretch her legs and usually i get people asking what I do for a living so that gives me some new leads business situations all on it's own...But i keep my cars away from people so she stay out of harms way BUT there been situations that i actually meet with the CEO or client at some event or club events then i will take my ride there so there you go it can be justified I did this for 8 years now and NEVER GOT an audit. Of course this doesn't mean it's a license to go expense expense and expense you know there's a balance on how much you can expense IMHO you have to have discipline to pay your taxes which i'm not sure alot people do and thats what is going to set off the audit more than anything. I just got an email from my account boy oh boy another $300k for taxes and this is with a bunch of business write offs including the exotic cars and food costs, entertainment costs, many other office costs still got hammered. Anyway what I said above is straight out of my accountant's mouth and he is VERY conservative guy no B.S. So this is the truth. By the way I have to believe that MOST people here who actually boast about paying cash either A have chit loads of money or B never really make high 1% income situation so yes it would be very hard to try to justify an exotic car write offs. To be honest even if you have cash why would you ever pay cash? Mayweather made 100 million dollars on a Pacquao fight at 35% (Federal Tax) being vegas that's $35million dollars right there could it be why he have like many cars and they are all on corp lease? Hmmm also dont let the he paid all cash part fool you there's NO f fin way he paid all cash cmon unless he want to be like Nick Cage or Wes Snipes there you go those dudes paid cash for everything and look at what happened to their tax situation. Leasing usually help with taxes ONLY when you're continuing to briningn in BIG cash to your corporation. Hope i don't piss some of you off by saying it.
lots of people are w2 and dont have the ability to do this. also remember al capone went to jail for tax evasion, not for being a murderer etc
You can do anything you want on your taxes. It's of no consequence until you're audited and lucky for you you haven't been audited yet.
Wouldn't say luck at this point there's a balance like I said. But I'm sure there's people that abuse this and of course only a matter of time. Just pay your taxes and have a balance it shouldn't be a problem.
If you haven't been whoring around in an exotice you've missed half the point of owning one... or in your case renting one with an option to buy while sticking it to uncle Sam with a 35% tax discount. You probably don't whore around in it because you're too busy counting the restricted miles on your lease and worrying if the clubs are considered a business meeting. No sir you've never enjoyed owning an exotic.
Yes if we can all justify leasing a Ferrari and writing it off , then why not. Unfortunately I can't in my line of work. But I also know ppl with corps that are $500m+, $1b, that just pay for their toys cash and save the trouble of justifying the tax write off. I guess to some people its just a drop in the bucket so why risk the trouble afterall if you can really afford it. If you aren't going to spend your money, your wife and kids will and they won't be the one getting hassled by the law. Haha
Deducting the cost of a car from taxable income doesn't require leasing it. A lease is just a financing arrangement, one which comes with constraints on mileage, etc. For this reason I would never consider it, or even buying a luxury item like this if paying cash for it represented a significant expense relative to income.
So I guess the girl I met at the event shortly within an hour when I had her head in between my legs in the car part right under the steering wheel with her head going up and down doesn't count then? Dam that sucks.. Get it? Ha
Leasing never seemed to make sense to me. First of all, I'd never buy a new car. Ever. It's a waste of money. I get mine when they are old enough that the depreciation hit has been taken. That way you are enjoying perfectly great cars, at minimal expense. I knew a guy who leased the 360 when it came out in 1999. He lost over $100K in just a few years but didn't really care because his company was netting $10M+/yr. I always thought it sounded like a senseless waste of money, but at that income bracket I guess it can be justified. Anything less, though, and it just becomes progressively less sensible. None of the math ever adds up in favor of leasing. The deductions, if you are willing to chance it with the IRS are negligible and it's not your car at the end of the day unless you pay the residual at which point you could have bought the car cash to begin with. The argument that you're tying up money in a car that could otherwise be spent on good investments is also a bunch of bull. There are currently no ways of consistently and safely earning the 6-8% interest before taxes on anything in the stock market or housing market. If there was we'd all be doing it. You could go buy land, build and sell (which is what I do for a living), but that's going to take actual WORK. It's not passive income. This whole "lost opportunity" bull doesn't matter. Anyone well enough off to afford a decent exotic is not going to buy it unless they can afford to buy it cash and their business opportunities are not impacted by $200-300K less in their bank accounts. Whether I hypothetically have say $5.6M cash or $5.4M cash after buying an exotic is not going to make me lose out on any opportunities. I wouldn't ever deplete my cash reserves no matter what investment opportunities came about. I firmly believe people who lease are at either ends of the spectrum of the wide term that is "rich". They are either very very wealthy individuals with so much disposable income that $100K losses won't matter. Or they are "keeping up with Jones' newly rich" making around $500K-$1M/yr, saving very little, most likely also owning an expensive house with only 20% down. I just don't see the point of leases.
Depends on any factors: 1. Are you trying to keep you payment as low as possible. Leasing will generally be lower per month and require less upfront money. 2. How long do you think you will be keeping the car? 3. How many miles will you use it per year? 4. Do you own a business? 5. Leasing is better for taxes now. Purchasing can be better when you sell the car. Depreciation and FMV will drive the tax consequences when you sell it outright or trade it in. 6. Do you like to trick cars out with wheels, exhaust etc. (if yes, don't lease it) 7. Call your CPA. Lots of moving pieces here.
I'm in California, so I pay 53.5% taxes on my income. I have cut much bigger checks than that to the IRS. It's just the way it is over here. There's no escaping Uncle Sam the moment you take out a profit in the form of personal income.
Not sure what your point is. 99.99% of us are in no position to write off an exotic as a business expense without getting red flagged.
It really depends on your situation. I don't think you can say theres a simple rule for everyone. I lease my daily driver- a BMW. I can write it off because its a legitimate business expense and the tax code allows me to do it. Of course, it would seem to be cheaper to go with a car that is a few years old, a bit depreciated, but in my case, I've run the numbers and its closer than you might think. BMW FS makes their lease rates very attractive (thats their own marketing strategy), and for that I get a great car with a full warranty, the latest safety tech and included maintenance, easy relationship, loaner car when service occurs etc. It works for me. I don't deduct the maximum I could, I conservatively rate the miles I deduct. I wouldn't do something I couldn't look into the eyes of an auditor and say- here is all the backup and the car is a legitimate business expense. If you are some kind of entertainer or someone for which having an exotic car would be considered a business expense due to projecting an image or something else, it could really be legitimate. Its like the others said, just be prepared to back it up.
I clarified that in my post clearly but some people just think they're smart and know everything oh well
