I am looking to lease a vehicle thru my company. I would like to structure the deal/terms so that I maximize the value of the vehicle when I purchase at lease end. How should I structure it (i.e. maximize mileage allowance, certain length, any money down, etc?). Want to maximize the tax savings during lease and optimize the personal purchase at the end. Thanks!
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In Maryland, you’re going to have to pay the full tax anyway. There’s no tax savings. Is this a car with massive lease rebates that can’t be utilized on a purchase in the first place?
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Maximize or minimize the purchase price at lease end?
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I assume you mean to lower the buyout price as much as possible. With that, you will raise the monthly payment to lower the residual (by adding miles to lease).
Have you narrowed down vehicle(s)?
I can deduct some of the lease payments for a tax savings. MD does indeed require full taxes, but that is another benefit of me buying it at lease end (i.e. it would be included in the lease payments and also deducted).
Yes, I am looking to lower the buyout price. Sounds like adding mileage to increase payments might be the only way.
I have seen a lot of lease bonuses / incentives, but I guess that only lowers the lease payments and would not impact the buyout price.
Thanks for the comments/input so far
You’d be paying sales tax again because ownership is changing, isn’t it? From the business entity to personal
None of us is your CPA, the person you should ask, but this topic has been discussed often. Best to search here on LH for Section 179.
Is your business a pass-thru entity (LLC not taxed as LLP/C, S Corp or LLC taxed as S corp) or a B/C corp?
Have you compared the leasing/insurance costs between you personally and the business leasing the vehicle?
Is the goal for the business to expense the lease payments and you the individual buys at disposition - or is the company expensing and buying at disposition?
Does the hypothetical mystery vehicle qualify for Section 179? Accelerated depreciation?
I can’t comment on the tax part.
You buyout price is dictated by the residual value set at the time of contract in a closed-end lease. If you want to minimize the buyout price, you can increase your mileage per year and increase the length of the lease (do the reverse to maximize your buyout price). Different trims of the same model sometimes have different residual values. You can find out the difference in residual values among terms, annual mileage, and trims using Rate Findr.
I would not recommend putting money down (it doesn’t impact the residual value anyways). I would recommend structuring the lease as if you would be turning it in at the end in case you change your mind 2-3 years down the road, as business objectives can fluctuate.
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Haha - “hypothetical mystery vehicle”. Its a Ram 1500. The company tries not to purchase vehicles for the 179, but lease them instead and deduct the business portion of the lease payments.
My dilemma is that I want to snag a '24 V8 and there are not many left. They currently have huge discounts for purchasing, but not leasing. Other dilemma is that our business strategy might change this year and I might have to purchase off lease. If I wasn’t in a crunch to get a '24 V8, I’d wait it out and see how business goes.
Again, appreciate everyone’s input so far!
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So buy it and deduct the business expense.
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