Q7 - Lease or Buy?

Off-Ramp
1

I’m now self-employed and my CPA says I should lease my next car rather than buy, which I pretty much agree with from a tax planning standpoint.

However, I drive about 15k miles per year, and am undecided if it makes more sense to buy vs lease a Q7 Prestige with an MSRP of about $78k. I’ve been seeing the residual value is terrible if I go with 36/15k, and it appears to be quite a bit lower than a loaded X5.

At what point does one draw the line and decide to either lease or buy? I can’t seem to find that particular line myself.

I know I could get a premium plus and it’d increase the RV by 4% or so, and I would consider doing so if that helps with any of your input.

Thanks

2

15k/yr isn’t that bad. I’d do what the CPA recommends.

In regards to the P+ vs Prestige, Im pretty sure the P+ doesn’t have a 4% better RV than a Prestige.

3

I owned a bmw 335i for 8 years, see below for details. Don’t own a German vehicle…ever.

4

15k/year is excellent; mine is 5k/year.

5

If I’m not mistaken, you can still deduct for depreciation on a car that you’ve purchased/financed, so doesn’t it end up being roughly equal (from a tax perspective) for lease vs. buy?

1 Like
7

Yes. You can deduct depreciation from a purchased car, but if I’m not mistaken, the inclusion amounts for luxury leases end up making leasing more favorable than buying. I’m no tax pro, though.

8

Lease a p+

Don’t buy a German car unless you’re willing to ride it until it’s resale value is in the teens or lower.

9

Have you considered going bigger and using section 179.

It’s insane that this option incentivices purchasing a huge truck but the deductions are very generous.

10

Lease it.
Then buy it if you like it.

11

I’d be very, very careful running a car through business expenses when it’s also/largely for personal use, especially an expensive car that isn’t always “necessary” for the business. You must account for personal vs. business use/mileage. Running the entire car through the business causes issues, and I’ve seen people get caught after I warned them.

IRC 179 is also limited or not followed by some states, so that’s something to consider on the state tax side.