They have the residual at 135K after three years!! Cap cost 240 with 30K down. 3500/month. Mind you I'll drive about 2-3K per year. The low residual will be nice, but I can only deduct 25K/ year for tax purposes. Comments??
get the lease quote yourself and not through the dealer. the dealer has a mark-up that adds about 10K over a 3 year lease. lease rates on exotics are not great deals in general
FWIW, my accountant has told me the same thing. But, I don't push it at all... even though my accountant says it's a non issue. "drive whatever you want" I am told... and take the deduction. With that advice from my accountant aside, I am a firm believer that anything that catches the IRS as "unusual" isn't a good thing. I don't want the headache of an audit, even if I'm legal. Just my $0.02.
On the lease you mentioned, it will cost you approx. $16.80 in lease payments for each mile that you drive, plus maintenence, gas, and insurance. Good luck!
The taxman can't say anything about the car you need for business. It doesn't make sense whether you have a Hyundai or a Ferrari, you can have it because you pay for it. That's why a car collector here in Holland will lose almost his entire collection when he gets bankrupt.
What companies do Ferraris? What are interest rates or money factors? Can you get out of the lease without having to pay the sum of payments plus residual? BMW and Mercedes do it that way and also make it very painful to have another party take over your lease.
You might want to check with your accountant again regarding the 25K deduction on a lease. There are several things inaccurate about that. 1) The 25K limitation refers to a purchase, not a lease, unless it's a "capitalized lease". (Every car lease that I've ever heard of is an operating lease). 2) The 25K deduction would result from taking a Section 179 deduction. However, there are limitations for a "luxury auto" that caps depreciation at $2,960 for a car. The 25K cap is only for certain vehicles > 6,000 pounds. 3) The vehicle must be 100% business use in order to take the full deduction. If the business use is less, the % is reduced accordingly. There is actually no limitation on the cost of a car lease. There is, however, a "lease inclusion amount" that must be added back to your income. This amount is calculated based on the FMV of the vehicle. Therefore, the greater the value of the car, the greater the amount of income that you need to add to your tax return.
It it's a lease you should not have a $25K limit. Contact the following if you want a professionally structured lease with no dealer overheads. Twyla Grimsley, Lease Manager Putnam Leasing Company Inc. 4712 Admiralty Way #598 Marina del Rey, CA 90292 310.922.1921 310.388.1176 Fax [email protected] www.putnamleasing .com
"..The low residual will be nice, but I can only deduct 25K/ year for tax purposes." I actually think that you're better off with a high residual since that would decrease the amount of "depreciation" on the car. The lower the depreciation, the lower the payment. It might seem that a lower residual is good because you would pay less if you purchase the car at the end of the lease period; however, that is not the case. The higher payments over the lease term equal a loss of the "time value of money". In addition, if you plan on eventually buying the car, you'd be better off, economically, simply financing it as a purchase from the outset.
AFAIK the tip off to the system that you are pushing things too far is not how much, its the % of the total lease costs you are "writing off". You may not know but you can not write off your commute. The tax code does not consider that a "business trip". I forget how much we use as a rule, but its something like 25% stays personal and 75% is written off. Like anything else in life, if you get piggish you will get slapped down- so just don't get piggish. JMHO. Btw- I agree with Spiderguy's points on residual values. best regards, Jerry
DO YOURSELF A BIG FAVOR, DO NOT LEASE FROM PUTNAM LEASING. THEY ARE NOTHING BUT CROOKS. TRY PREMIERE FINANCIAL SERVICES. THEY ARE LEGITIMATE. THEY DON'T RIP YOU OFF LIKE PUTNAM LEASING AND DO NOT BELIEVE EVERY THING PUTNAM SAYS ESPECIALLY EARLY TERMINATION PENALTY EVEN THOUGH THE AGENT TOLD ME PERSONALLY THERE ARE NO EARLY TERMINATION AFTER 12 MONTHS OF PAYMENTS. PM ME IF YOU WANT TO AVOID HEADACHE. I DO SPEAK FROM EXPERIENCE WITH PUTNAM LEASING. I GOT RIPPED OFF OVER $12K AFTER MAKING OVER 22 MONTHS OF PAYMENTS. GOOD LUCK!!
Might have to get the 599 instead But everything he said sounds right to me, I looked into it awhile back and it didn't work out for all the same reasons mentioned. edit: And avoid taking tax advice from anyone thats not a tax attorney...
I have had great experiences with Putnam Leasing and Twyla. She is most excellent. The main problem with these companies like Premiere and Putam is customers do not understand how these so called leases work. Actually they are really not leases, they are baloon's that are closed end which means you have to buy the car at the end of the term. They are frontloaded with almost all interest and if you try to get out after two years, you are most likely going to owe what you initially financed. There are ways to manipulate things like playing with the residual but for the most part for someone who is a flipper and does not keep thier cars these are not effective.
With all respect, I think "front loading" is the source of the problem (not flipping) for the unwary or uneducated. A smart consumer should never under take a front loaded transaction, or one laden with pre-payment penalties. However, when the "red mist" is upon some people, common sense goes out the door! Remember, you get what you negotiate!
What's with the shouting ? Putnam Leasing are a highly regarded and well-respected company. If you're not capable of understanding a lease agreement and any prepayment penalties that may exist, then you have only yourself to blame. Read what you sign, and remember it's "caveat emptor". Oh, and Putnam have a history of successfully suing those who libel them.
Ferrame, I have it on very reliable information that your posting is very erroneous, inaccurate, and extremely inflamatory! Are you sure about 22 months of payments or was that 4 months of payments? And wasn't that a 430 that you flipped for good money? I think you owe Putnam a written apology and you should retract your post! You make unsubstantiated written statements as you did and you subject yourself to substantial liability while you inflame the purpose of the advice given in this thread!
