What most people in this forum (I posted the example in different topics) failed to understand is that I consider the $15k “lost” already since that amount will go out to the government as taxes anyway. I personally think it’s worth the risk of putting the $15k down to allow me to drive an awesome car for as low as $200/month for 24 months (or as long as nothing bad happens). Of course, the $15k could indeed go down the drain if I total the car driving out of the dealership, but again, that’s a risk I’m easily willing to take given the circumstances.
As someone else pointed out, if you are required to amortize your down payment over the life of the lease, you don’t really get to deduct it entirely in your 2018 taxes
Correct, hence the shorter lease. Still a good deal
Isnt the $15k just reducing your taxable income (or business’s profit), so the entire $15k isnt going to the government, just $15k x tax rate? If you needed to save $15k in taxes, you would need to spend $15k divided by your tax rate to have that impact. [E.g. tax rate of 33%, reduce your income by $15k, you save $5k in taxes. To reduce your taxes by $15k you would need to reduce income by $45k.]
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What @cheapdad00 says. I don’t think you are lowering your taxes by 15k, but 15k x tax rate which isn’t that attractive.
But if you want to drop 15k on a down payment then go ahead. Not sure why you are trying to convince people.
I think the only portion of the down payment that could be lost would be the difference between the appraised market value and what the payoff would have been if there was no money down (CCR). It can’t be right that the insurance company only has to cover the payoff regardless of what the lessee put down on the lease- that doesn’t make sense. For example:
Scenario A- no money put down on lease. Car’s market value when totaled $50K, payoff $53K. GAP insurance covers this, if included (it usually is).
Scenario B- down payment (CCR) was $12K, payoff is $41K vs $53K. Lessee gets $9K ($50K - $41K). It appears you guys are saying the $9K is lost. In reality, $3K is lost because the GAP insurance would have protected maybe some but not necessarily all of the down payment.
This was discussed here:
I think dermonte wants to write off $15K, not get a $15K tax credit.
@dermonte - it sounds like you’ve discussed this with your tax preparer, or you’re at least savvy about the tax laws. If not, I would have that discussion if you’re not 100% confident in what play you make. If you make a big down payment (CCR), GAP insurance isn’t going to help you, anyway. Most lenders include it.