Drive an Expensive Import? You Probably Lease It

BMWs are a GREAT car to lease because they pay for the scheduled maintenance (even brakes!) for 4 years 50k miles. They have high residuals too which keeps payments low. Thats why they're so commonly leased.

What I don't agree with the article insinuating is that people who lease do so because they can't afford to buy. Many people who drive vehicles like that are businesspeople (like me) who can write off a vehicle as a business expense. If you can do that leasing makes a lot of sense, whether you can afford to buy the car or not.

 

You can do the same if you buy. It's just different accounting.

... Brad

 

The benefit isn't as great. If you buy the car you have to depreciate it, if you lease the car you can write the entire lease payment off. So, if you have $1200 lease payments on a 7 series BMW, thats a $14,400 deduction per year whereas you'd have to depreciate the purchase price of $80,000 which isn't going to equal $14,400 in a year, for 2008 the limit is $2,960.

On top of the lease payment you can write off all the vehicle expenses, gas, maintenance etc.

Bear in mind you have to own another car you can substantiate you use for pleasure to write off a vehicle 100%, I do, but I play it safe and only write the vehicle off 80%.

I own my Lexus because I bought it out of the lease because I liked it (stupid idea) and because I was starting a new business at the time and didn't want monthly payments (I bought it in cash, which I also never do). When I replace it sometime next year though, only leasing for me. I wouldn't even consider buying with my tax scenario.