Looking to get into a X3 30e and have a question about the tax credit.
I believe when leasing, the tax credit goes to BMW, so the lessee cannot claim it. It’s up to BMW whether to pass along the tax credit ($5.8k) or not in the form of rebates. Right now, it seems there are no rebates being passed along by BMW. This is according to a couple dealerships I asked. It also doesn’t seem like BMW is doing anything special with residuals and money-factors to incentivize leasing.
If I financed it, I believe I could claim the tax credit from the IRS at tax-filing time. It seems BMW is also offering a greater incentive through financing right now ($2.5k vs $1k for leasing). The downside is that I pay full sales tax (in CA) on the purchase price, instead of just on the depreciated portion.
I haven’t run the numbers, but it seems like I’m way better off financing it, especially if I can keep for it a bit longer than 3 years? I assume that no amount of lease wizardry can overcome losing the $5.8k tax credit.
Please help confirm/dispute my understanding, thanks!
Other BMW have full rebate pass like last gen 330e (when it was leasable), current i3, etc. It’ll be awhile till the full 5k and change will be passed on (probably quicker for current 330e) to lessee if ever. I would also love to have a x3 PHEV but I don’t think I would own a bimmer (I have/had a few) mostly for re-sale and maintenance reasons.
I would probably finance it or just lease another X3 without tax credits. just know that most other cars that get federal tax credits have much lower residuals like the Etron, ipace and xc90 T8. BMWs have slightly higher residuals to begin with and then in this case are not deducting the phev status from the residual. So the credit might not be passed on in terms of lease cash but it might partially exist in the not-depressed residual value.
Said another way - if you finance this don’t expect to be able sell/trade in this car in 3 years at the lease residual since it’s probably unrealistic. Alternatively if you hold for 5-6 years, you are still dealing with relatively significant deprecation in years 4,5,6 and also paying maintenance from say 36-72k miles which can be high for a bmw and especially a bmw with a new and more complex powertrain.
I looked very deeply into financing and owning a 2021 X5 45e over several durations and decided to lease a Volvo XC90 instead because it was significantly cheaper, unless i held onto the X5 for like 8-10 years
Thanks for pointing this out. I didn’t realize that other manufacturers drop their residuals for PHEVs.
I did a rough calculation and the breakeven point between leasing and financing (assuming I sell in 3 years) is a ~45% selling residual. That means that if I can sell it for more than 45% of MSRP in 3 years, I come out ahead by financing. It’s definitely a gamble.
That’s surprising to hear. I always thought that Volvo hybrids are very expensive, even compared to the Germans. When I specced out the XC60 that I want, it was $6k more than the 30e. Probably not a fair comparison though since I have to admit the Volvo is a better car.
Are you counting all the extra tax you pay owning it? if you plan to trade into dealer to save the tax for new car in 3 years are you counting the buying dealer giving you a bad deal? Why don’t you look at cost of financing 30e with tax credit vs leasing a conventional x3 30i, there are some good deals around. In my case I went with a conventional ICE xc90, not the T8
Msrp has very little to do with leasing prices, common and detrimental misconception among those who have not learned about leasing basics. The xc60 will most likely lease cheaper than the X3, I think the X3 is a better car overall, but if you feel the reverse maybe look into xc60 deals, tons advertised on this forum.
Yes I did factor that in. The lease is based on base MF, full MSDs, etc. The loan is based on a 0.9% APR currently being offered. Appropriate incentives applied to both sides.
No disagreement there. In fact, I’m trying to point out that the “bad deal” would have to be at <45% to take me under. In CA, you don’t save on taxes with trade-ins.
I will, thanks. I didn’t think Volvo was in the cheap-lease game.
That’s an interesting idea. I plugged some numbers into my spreadsheets, and once again, at about a 45% residual selling price of the 30e’s MSRP, the two options come out even. There’s some fuel savings that I did not bother considering. These are rough numbers, it’s late.
Note that I’m not saying one way is clearly better than the other. I’m just pointing out that 45% is the breakeven point. I haven’t looked up what a 3 year old 330e sells for, relative to its original MSRP.
