Lease vs Buy Used

[Djokodallas]

Hi Guys,

I am just trying to figure out the following:

A. To lease brand new M5/M6 or CLS63
B. To buy 1 or 2 year old car and save $$$$
------------------------------------------------------

With lease:
1. You get a new car every 2-3 years
2. You always drive news best etc
3. No worries about selling it after just swap cars
4. If you get into accident its on MB or BMW
5. Car is under warranty always

With Purchase of a 1-2 year old car:
1. Save at least 25k
2. After 5 years you will have car that you will actually own
3. Even if you sell that 5-6 year old car you will still be able to sell it for 20k
4. Even if you spend 5k on repairs you will still sell the car for 15k lets say and still be plus 10k.....

So if you lease BMW M5 for 6 years you will spend about 1,000 - 1,300 per month.

6years * 12 = 72
72 * $1,150 = $82,800

So after 6 years you paid off one M5 in full......(I am CPA ignoring interest, just plain calculation,etc)

Now if you deduct for businesses use M5 there is no way (well unless you like audit) that you will deduct more than 50% of your lease......

I am looking at autotrader.com and there are 2013 M5 with 20,000 miles for about 75k......

Can someone help me here ?

Thanks

[wrsbmw]

Originally Posted by Djokodallas

Hi Guys,

I am just trying to figure out the following:

A. To lease brand new M5/M6 or CLS63
B. To buy 1 or 2 year old car and save $$$$
------------------------------------------------------

With lease:
1. You get a new car every 2-3 years
2. You always drive news best etc
3. No worries about selling it after just swap cars
4. If you get into accident its on MB or BMW
5. Car is under warranty always

With Purchase of a 1-2 year old car:
1. Save at least 25k
2. After 5 years you will have car that you will actually own
3. Even if you sell that 5-6 year old car you will still be able to sell it for 20k
4. Even if you spend 5k on repairs you will still sell the car for 15k lets say and still be plus 10k.....

So if you lease BMW M5 for 6 years you will spend about 1,000 - 1,300 per month.

6years * 12 = 72
72 * $1,150 = $82,800

So after 6 years you paid off one M5 in full......(I am CPA ignoring interest, just plain calculation,etc)

Now if you deduct for businesses use M5 there is no way (well unless you like audit) that you will deduct more than 50% of your lease......

I am looking at autotrader.com and there are 2013 M5 with 20,000 miles for about 75k......

Can someone help me here ?

Thanks

$82,800 - $20,000 = $62,800

In six years you can save up what you need to buy a decent used one with < 20k miles on it. There is a lot to be said for writing a check and walking away with a car you own outright. Buy a solid toyota now for $20k and drive it the next 6 years while saving the $1100/mo payment.

You should have seen the pile of crap I drove at your age.

[Djokodallas]

Well just for the record I did start with Hyundai and got it in cash when I was 21 (with my money) than toyota than infiniti than mercedes than porsche than back to mercedes and now it's time to get a sport car again.....

I just don't want to turn 60 and than get ferrari that's silly....

When I turn 60 I want to be free and fulfilled. for instance a box thats empty on a paper (bucket list) by that age that box should have a check mark on it.

I guess my point is that I can afford a car that's 70-100k....

But I am just not sure why would you lease the car......

[wrsbmw]

Originally Posted by Djokodallas

I just don't want to turn 60 and than get ferrari that's silly....

When I turn 60 I want to be free and fulfilled. for instance a box thats empty on a paper (bucket list) by that age that box should have a check mark on it.

Then at 60 you do what, dig a hole, lie down and wait to die?

LOL!

[Ex_Stig]

A six year lease? That is a terrible idea. Hopefully you were just using that as an example.

If you can deduct part of the payment as a business expense then I would say lease. Otherwise, I would recommend someone buy. You have zero equity at the end of a lease.

[Djokodallas]

No you just reached nirvana already man. You are just graceful and chill you are not trying to prove anything anymore, you been there, done that....
You are comfortable with you choices.

You find pleasure in traveling, grandkids, hunting elk, hunting in Africa etc......

When I see guy in Ferrari and he is 65+ I think about insecurity....

Here is the sequence:

1. Do great in high school
2. Get into Ivy League
3. Get great job (you will work first 5 years from 7-7)
4. Get married
5. Make children
6. Get first house
7. More children
8. Get bigger house
9. Become VP or upper
10. Get even bigger house
11. At this point you are 45-50
12. Sell bigger house and get smaller cuz kids are gone
13. You are 60 its time for Ferrari ( white one like in Miami Vice)




I am taking different route.....that all

But this is about lease not life.....why give 80k over 6 years to BMW when you can own that car after 6 years.....

I see you are from Austin, I really like Austin due to the "outside of the box" vibe.

Dallas is quite the opposite.....

[Djokodallas]

Sorry,

Its 3 years lease but two of them..... I am assuming that you will lease more than once....

[Mr_M5Guy]

Originally Posted by Djokodallas

Hi Guys,

I am just trying to figure out the following:

A. To lease brand new M5/M6 or CLS63
B. To buy 1 or 2 year old car and save $$$$
------------------------------------------------------

With lease:
1. You get a new car every 2-3 years
2. You always drive news best etc
3. No worries about selling it after just swap cars
4. If you get into accident its on MB or BMW
5. Car is under warranty always

With Purchase of a 1-2 year old car:
1. Save at least 25k
2. After 5 years you will have car that you will actually own
3. Even if you sell that 5-6 year old car you will still be able to sell it for 20k
4. Even if you spend 5k on repairs you will still sell the car for 15k lets say and still be plus 10k.....

So if you lease BMW M5 for 6 years you will spend about 1,000 - 1,300 per month.

6years * 12 = 72
72 * $1,150 = $82,800

So after 6 years you paid off one M5 in full......(I am CPA ignoring interest, just plain calculation,etc)

Now if you deduct for businesses use M5 there is no way (well unless you like audit) that you will deduct more than 50% of your lease......

I am looking at autotrader.com and there are 2013 M5 with 20,000 miles for about 75k......

Can someone help me here ?

Thanks

I am a business owner and will be doing a lease also. I plan own writing off 80% for business. Could you explain why we should only do 50%? Thanks for your advice

[wrsbmw]

Originally Posted by Djokodallas

No you just reached nirvana already man. You are just graceful and chill you are not trying to prove anything anymore, you been there, done that....
You are comfortable with you choices.

You find pleasure in traveling, grandkids, hunting elk, hunting in Africa etc......

When I see guy in Ferrari and he is 65+ I think about insecurity....

Here is the sequence:

1. Do great in high school
2. Get into Ivy League
3. Get great job (you will work first 5 years from 7-7)
4. Get married
5. Make children
6. Get first house
7. More children
8. Get bigger house
9. Become VP or upper
10. Get even bigger house
11. At this point you are 45-50
12. Sell bigger house and get smaller cuz kids are gone
13. You are 60 its time for Ferrari ( white one like in Miami Vice)




I am taking different route.....that all

But this is about lease not life.....why give 80k over 6 years to BMW when you can own that car after 6 years.....

I see you are from Austin, I really like Austin due to the "outside of the box" vibe.

Dallas is quite the opposite.....

My daughter lives in Plano, it's a very materialistic vibe there, especially the Legacy, lot's of hot cars there. Wouldn't a Ferrari be fun at 60 still? I don't know because I am only 58 and I only have a m5, not a Ferrari,yet.............

So should I get rid of the m5 and do the Ferrari now, before 60 or is 58 really 60 in your formula?

[wrsbmw]

Originally Posted by flaury23

I am a business owner and will be doing a lease also. I plan own writing off 80% for business. Could you explain why we should only do 50%? Thanks for your advice

He gave you the answer, audit. They will make you prove the percentage you use it for business and you better have kept good records. That kind of deduction flags you for an audit if you don't have a business that requires the car. If you are in real-estate, go for it, I would guess you can do 80% there and they probably won't mess with you.

[Djokodallas]

Well lets say you have a restaurant.

If you get MB sprinter you can write off this entirely, its a van.

Lets say you get X5 or MB GL450 and you have a daycare. You can write off 100%

Take a look at section http://www.section179.org/

Over 6,000lbs gross weight, IRS is really giving us a lot of room. (hence a lot of RANGE rovers, G class MB, GL450, Caddy )

Now lets say you have restaurant and you get M5 and you want to write off 80%. How are you gonna justify this? You go to meeting? You deliver?

If you ever get audited, you will have issues getting business loans, IRS goes up to 5 years back, its a big mess......

Let say you sell houses ( real estate agent) they usually write off any car they have. A lot of them drive high end cars......Because this is very gray area.....Irs is not telling you dont write off you M5, they just want you to be reasonable.....

So to answer correctly, business type is really important.
Is it LLC, S-Corp, C-corp, its little complicated.

Most people that I know usually write off 50% if car is 100k or more.....

And please dont go for:

" hey dude I will get M5 and I will put my logo and claim it as adverting expense"

Its prohibited by IRS.....

[Djokodallas]

I live off Tollway and Legacy by Shop's of Legacy.

Well dude I am not trying yo judge you. Sorry If I come of as that....

I respect your decision to get M5. I am 28 I don't even know how I am going to feel when I turn 58, maybe I will be that guy in Ferrari maybe I will have Toyota Corolla. I just know that I remember when I was 18 like it was yesterday.

We are Playing The Cards We're Dealt.

I guess I am trying to do it while I am young because I have a chance and I don't want to regret the moment later.

[NlckyBlack]

The problem is your thinking too much like an accountant and not living your life in the present. Live for today, tomorrow may not be here. I could drive a corrolla and save all the money i spend on my cars, but thats not fun. I don't rationalize the cost. I enjoy all of my cars and drive them. In 5 years you will have a 7 year old M5. Not a car i would want to own out of warranty with super repair bills and unreliability especially if you purchased a used car from somebody like myself after having it for 2-3 years.

If you have the means i highly suggest picking one up........(Ferris Bueller)

[NlckyBlack]

.

[Djokodallas]

Originally Posted by NlckyBlack

The problem is your thinking too much like an accountant and not living your life in the present. Live for today, tomorrow may not be here. I could drive a corrolla and save all the money i spend on my cars, but thats not fun. I don't rationalize the cost. I enjoy all of my cars and drive them. In 5 years you will have a 7 year old M5. Not a car i would want to own out of warranty with super repair bills and unreliability especially if you purchased a used car from somebody like myself after having it for 2-3 years.

If you have the means i highly suggest picking one up........(Ferris Bueller)

I appreciate the answer.

It's really honest and to the point.

So basically it's a pure luxury and pleasure and you are just accepting the fact that if you were driving corolla you would have 100k in the bank but you wouldn't have the pleasure.

If you got the $$ go for the lease don't worry about saving correct ?

Do you lease all of your cars? What do you do when 3 years is up ?

[bimmer-boy]

Hunting in Africa?

I know some Americans like to hunt

BUT

I hope you don't mean hunting those endangered elephants, rhinos, lions etc

Because that's just retarded

[wrsbmw]

Originally Posted by Djokodallas

I live off Tollway and Legacy by Shop's of Legacy.

Well dude I am not trying yo judge you. Sorry If I come of as that....

I respect your decision to get M5. I am 28 I don't even know how I am going to feel when I turn 58, maybe I will be that guy in Ferrari maybe I will have Toyota Corolla. I just know that I remember when I was 18 like it was yesterday.

We are Playing The Cards We're Dealt.

I guess I am trying to do it while I am young because I have a chance and I don't want to regret the moment later.

LOL! Just playing with you man, I am good. Here are some comparo pics for you, the first are at 29 in Panama (July 85) and the second is in my daughter's pool last Memorial day.

I remember 18 like it was yesterday too.

[Djokodallas]

Lol
Man that awesome
Really far out

Never been to South America but at least I traveled all over Europe.

[Djokodallas]

Originally Posted by bimmer-boy

Hunting in Africa?

I know some Americans like to hunt

BUT

I hope you don't mean hunting those endangered elephants, rhinos, lions etc

Because that's just retarded

No like Antelopes, etc

Just being free in the wild was my point. If you are not into killing that's cool. I was just trying to say be in environment that's rewarding.

[2sak2furious]

Correct me if Im wrong as you are the accountant, but
a) 50% of lease payments deductible
b) 0% of purchase payments deductible

From a tax standpoint/business owner tax savings and if you need deductions esp to get into that lower bracket then leasing is the way to go, as I am doing with my M5.

Im sure the lease vs buy has been argued to death in previous posts.

Anyways, good luck!

[Djokodallas]

Originally Posted by 2sak2furious

Correct me if Im wrong as you are the accountant, but

b) 0% of purchase payments deductible ----> If the heavy SUV was not new, but instead was a used vehicle, 50% bonus depreciation would not be available.( i guess you are referring to M5


Anyways, good luck!

Well like I stated above.

Depends on your business nature.
As a CPA I would encourage 50 percent deduction.

It's hard to answer the question without having entire scenario in place.


That's why irs is putting 6,000 gross weight.

In general leasing you can deduct 100 per cent of lease pmt-- do you wanna do it? It's up to you
For 2013 you can depreciate car under 6,000 lbs up to $23,760.

Most range rovers and mb g class are owned by small business owners due to 6,000 lbs rule

If you really want to save on tax suv is the way to go.

Real estate brokers (many selling just one house a year), attorneys, business owners, and drivers of corporate cars drive expensive leased vehicles because their lease payments can almost entirely be written off using an exaggerated business use percentage.

If a vehicle is purchased, the allowable depreciation is limited to the value of an ordinary basic car, so the additional depreciation amount for expensive luxury vehicles cannot be written off.

I guess what I am saying is:

Unless you are Real estate broker, attorney, guy that has a lot of meetings, physician with multiple locations there is no point in leasing M5 to save on tax.


If you don't have your own business there is no benefit in leasing unless you can get corporate car.

But on the other hand almost every business owner can benefit from leasing an SUV.

For instance:

1. You own construction company and you get m5 there is no way you can deduct over 50% in this scenario. Lets say you get Toyota Tundra and you deduct 100%. This would work.

2. You sell houses and you get M5. Can you deduct 75%? I would say yes

3. You have a restaurant. Can you deduct 50% on M5? Your restaurants better be getting 350k in gross income to justify this.

4. You have a oil change place and you get M5, I don't know you might be able to deduct something but I would not recommend.

5. You are lawyer, cool you can deduct about 75% for sure

6. Doctor with few clinics cool get 50-75%

7. Landscaping company I would not recommend (get GL450,get X5,)

So IRS is saying this. If you make serious gross income they will give room to move, but dude if you are bringing in 150k and you deduct a $1,300 per month for M5 that is not advisable.

Let me know

[Scorpion006]

So I just noticed you are driving a C63 - you will never find a car that sounds as good - no matter what you do to it! Just keep that in mind when you look for your next vehicle - just my 2 cents {I realize I didn't really answer your actual question}