Great advice guys. This is good info to have because I will be lease shopping with my brother in law next week. He knows nothing about cars and hates going to dealerships. I feel confident about buying but not leasing so I'll probably reread this thread several times before we visit the BMW and Audi dealerships next week.
Leasing Advice: 07 Tacoma
- Thread starter mshu7
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[sarcasm] MUST BE NICE! [/sarcasm]
If that's the case and it's not HIS car, maybe look into leasing a USED car. Typically banks will lease up to, I think, a 3 year old car. He could get into something like a Jaguar XJR (my personal preference, WAY more personality than an Audi or BMW), with a purchase price of $45k-ish. Leasing that for 3 years would get him WAY under $800 a month. If that's allowed, that's what I would do- in Radiance red with chrome wheels and a beige interior... oh wait, this isn't for me
Anyway!
Look in to maybe an A6 or A8 or something like that that's a few years old and try to lease it. Just make sure it'll be under some kind of warranty through the duration of the lease. I'm pretty sure all the same rules apply, but I bet the money factors aren't quite as good, just like buying a used car.
Kev
Yeah, out of embarrassment, I didn't wanna say that his company was giving him an "allowance" of $800 at first. Life is tough isn't it?
We should all have these problems.
He is a medical doctor but it's amazing how little business sense he has for a rich guy. Even with an $800 allowance, it wouldn't surprise me if he got taken to the cleaners and got either much less car than he can get or gets some much car that he *will* have to fork up some of his own money to cover the balance.
He is a medical doctor but it's amazing how little business sense he has for a rich guy. Even with an $800 allowance, it wouldn't surprise me if he got taken to the cleaners and got either much less car than he can get or gets some much car that he *will* have to fork up some of his own money to cover the balance.
I have a buddy who does auto leasing for a living (he operates his own car leasing company) and I'll run your numbers by him tomorrow and let you know what he says.
mshu7,
Why not just buy a truck and since its your detailing business, just write off the expenses on your Taxes ??
Why not just buy a truck and since its your detailing business, just write off the expenses on your Taxes ??
I did not get a chance to read all of the posts, but what happens if you go over the 15k/yr milage cap?
I have always thought of "leasing" as actualy "renting".
Tacoma's have one of the highest resale values of any car today. Owner's are rarely "upside down" on their payments.
Wh not purchase the vehicle, and depreciate it off your income tax over the next 5 years. You may be better off bottom line than leasing it.
Plus, go with the TRD Off-Road and not the TRD Sport. The OffRoad comes woth Locking Rear Diff, and the Sport has a Limited Slip Diff.
I have always thought of "leasing" as actualy "renting".
Tacoma's have one of the highest resale values of any car today. Owner's are rarely "upside down" on their payments.
Wh not purchase the vehicle, and depreciate it off your income tax over the next 5 years. You may be better off bottom line than leasing it.
Plus, go with the TRD Off-Road and not the TRD Sport. The OffRoad comes woth Locking Rear Diff, and the Sport has a Limited Slip Diff.
Leasing is more tax advantageous for a business. Plus, I can lease for cheaper than I could buy. I only have around $3000 in cash. I need a truck that is in good condition (image means a lot for my business) and isn't going to break down over the next few years. $3,000 won't get me a reliable used truck in good condition, I've looked. My other choice was to get a used car loan and finance a used truck. To get a decent truck I figure I'd have to spend $10-$15K. Yeah, that $3000 in cash would help, but a $10K loan (~6.35%) for 36 months would be around $300/month; the same as what I'm going to pay to lease the Tacoma. Then throw in possible repairs because it's a used vehicle and it's even more. With the new car lease, anything that goes wrong with the truck will be covered by the warranty. Plus, insurance on the Tacoma is only $12 more per month than my 2000 Grand Am GT so that helps to sway me towards to lease as well. The last thing is that because Tacoma's hold their value so well, I may be able to sell it at the end of my lease and make some money back.
I've tried to think hard about both leasing and buying used and leasing just makes more sense for what I'm doing.
You have a point. However, $300/month is all I have budgeted to spend. Buying outright would take me much farther beyond $300/month.
While there's only a $200 difference between the Sport and the Off-Road, I don't do any off-roading so I don't know that I'd need the extra off roading hardware. Honestly, I prefer the Sport because it comes with 17" wheels (vs. 16" on the off-road) and the hood scoop looks good IMO, even though it's not functional.
By the way, Merk, thanks for the alternate thinking on "renting" being the same as leasing. It sits better with me thinking like that.
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Here's the difference between the two packages:
TRD Off-Road Package (OC) -- SR5 Package #2 plus off-road tuned suspension with Bilstein® shocks, 16-in. alloy wheels with P265/70R16 BFGoodrich® Rugged Trail T/A tires, locking rear differential, engine skidplate and fuel tank protector, front tow hook, 115V/400-watt deck mounted power outlet, multi-function overhead console with compass and temperature gauge, sport seats with sport fabric and driver's lumbar support, and TRD Off-Road graphics (V6 models)
TRD Sport Package #1 (PY) -- Sport suspension with Bilstein® shocks, 17-in. alloy wheels with P265/65R17 tires, limited-slip rear differential, 115V/400-watt deck-mounted power outlet, fog lamps, power windows/door locks/outside mirrors, remote keyless entry system, cruise control, variable intermittent windshield wipers, multi-function overhead console with compass and outside temperature gauge, color-keyed grille surround/bumpers/mirrors/door handles/overfenders, sliding rear window with privacy glass, sport seats with driver’s lumbar support and sport fabric trim, metallic-tone instrument panel trim, leather-wrapped steering wheel and shifter, sun visors with sliding extensions and vanity mirror, hood scoop, and TRD Sport graphics (V6 models)
TRD Off-Road Package (OC) -- SR5 Package #2 plus off-road tuned suspension with Bilstein® shocks, 16-in. alloy wheels with P265/70R16 BFGoodrich® Rugged Trail T/A tires, locking rear differential, engine skidplate and fuel tank protector, front tow hook, 115V/400-watt deck mounted power outlet, multi-function overhead console with compass and temperature gauge, sport seats with sport fabric and driver's lumbar support, and TRD Off-Road graphics (V6 models)
TRD Sport Package #1 (PY) -- Sport suspension with Bilstein® shocks, 17-in. alloy wheels with P265/65R17 tires, limited-slip rear differential, 115V/400-watt deck-mounted power outlet, fog lamps, power windows/door locks/outside mirrors, remote keyless entry system, cruise control, variable intermittent windshield wipers, multi-function overhead console with compass and outside temperature gauge, color-keyed grille surround/bumpers/mirrors/door handles/overfenders, sliding rear window with privacy glass, sport seats with driver’s lumbar support and sport fabric trim, metallic-tone instrument panel trim, leather-wrapped steering wheel and shifter, sun visors with sliding extensions and vanity mirror, hood scoop, and TRD Sport graphics (V6 models)
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Leasing is more tax advantageous for a business.
Your profile lists detailing as hobby - no deduction at all for hobby expenses AFAIK. Assuming you do use it in a real business, it would seem that you would have to keep account of the business miles and personal miles and could only deduct that part of the lease payment that is actually used for business.
My accountant has my GTO on the books being depreciated, and I keep track of all my business miles on all of the vehicles, and they all go against the GTO to maximize the depreciation on it. How is a lease better than depreciation?
I do understand the concept of being able to lease that part of an asset that you are going to actually use as opposed to buying the entirety of it, but I think I would rather have a car (or any depreciating asset) at zero book and paid for then a constant stream of payments and deductions.
If you need a truck for a real business purpose, and if the section 179 deduction is still available that might be a good way to go, but the Tacoma probably would not be a qualifying vehicle.
Leasing is more tax advantageous for a business.
Your profile lists detailing as hobby - no deduction at all for hobby expenses AFAIK. Assuming you do use it in a real business, it would seem that you would have to keep account of the business miles and personal miles and could only deduct that part of the lease payment that is actually used for business.
My accountant has my GTO on the books being depreciated, and I keep track of all my business miles on all of the vehicles, and they all go against the GTO to maximize the depreciation on it. How is a lease better than depreciation?
I do understand the concept of being able to lease that part of an asset that you are going to actually use as opposed to buying the entirety of it, but I think I would rather have a car (or any depreciating asset) at zero book and paid for then a constant stream of payments and deductions.
If you need a truck for a real business purpose, and if the section 179 deduction is still available that might be a good way to go, but the Tacoma probably would not be a qualifying vehicle.
Your profile lists detailing as hobby - no deduction at all for hobby expenses AFAIK. Assuming you do use it in a real business, it would seem that you would have to keep account of the business miles and personal miles and could only deduct that part of the lease payment that is actually used for business.
My accountant has my GTO on the books being depreciated, and I keep track of all my business miles on all of the vehicles, and they all go against the GTO to maximize the depreciation on it. How is a lease better than depreciation?
I do understand the concept of being able to lease that part of an asset that you are going to actually use as opposed to buying the entirety of it, but I think I would rather have a car (or any depreciating asset) at zero book and paid for then a constant stream of payments and deductions.
If you need a truck for a real business purpose, and if the section 179 deduction is still available that might be a good way to go, but the Tacoma probably would not be a qualifying vehicle.
I apologize for not having my profile up to date. Yes, this will be a truck for my BUSINESS. Also, I am not an accountant. However, I have had two different accountants tell me that leasing would be better for my situation. I've also seen the same thing said on a handful of websites when researching what would be best for me.
Thanks
Edit: I've updated my profile for you so that there is no more confusion.
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Sorry - wasn't trying to be a smart aleck, but on rereading I acknowlege it came across that way.
I'm not an accountant either, but I'm actually genuinely interested in what, if any, the advantages of leasing a vehicle are for small business because I often read this "leasing is better" but it seems like throw away advice - no one ever explains it, just accepts it as fact.
I understand it freeing up capital to be used in other places, just curious if there is any other benefit.
I'm no tax accountant but I think buying a car and writing off the depreciation for business creates tax issues when you SELL the car. You have to go back and recapture that depreciation and end up paying tax on what you get for the vehicle at sale because it becomes either a capital gain or ordinary income, I can't remember which (if you go by-the-book).
If you lease a car for a business, your lease payment is just a business expense that gets written off. If you use the car 100% for business, you can write off 100% of the lease payment. If you use it 50%, you can write off less, etc. Plus your business is no longer responsible for sudden, unexpected depreciation should that particular vehicle became known for being a POS, etc. Also, and I'm not sure about this, but you may be able to write off some mileage along with the lease payment... Maybe someone will know better about that aspect.
Overall it seems like if you purchased a vehicle that depreciated quickly for your business (like a dump truck), you'd be better off buying it and depreciating on your taxes because you'll have less depreciation recapture penatlies. If you purchased the Tacoma and depreciated it over 5 years sold it at a "profit" over your "interest" in the asset (according to the IRS), you'd end up with a capital gain (or ordinary income) and have to pay tax on it...
Again, I'm not a tax accountant, but this makes sense to my twisted mind and rings a bell with my previous education...!
If you lease a car for a business, your lease payment is just a business expense that gets written off. If you use the car 100% for business, you can write off 100% of the lease payment. If you use it 50%, you can write off less, etc. Plus your business is no longer responsible for sudden, unexpected depreciation should that particular vehicle became known for being a POS, etc. Also, and I'm not sure about this, but you may be able to write off some mileage along with the lease payment... Maybe someone will know better about that aspect.
Overall it seems like if you purchased a vehicle that depreciated quickly for your business (like a dump truck), you'd be better off buying it and depreciating on your taxes because you'll have less depreciation recapture penatlies. If you purchased the Tacoma and depreciated it over 5 years sold it at a "profit" over your "interest" in the asset (according to the IRS), you'd end up with a capital gain (or ordinary income) and have to pay tax on it...
Again, I'm not a tax accountant, but this makes sense to my twisted mind and rings a bell with my previous education...!
I think it would cause a taxable gain to sell one that has been depreciated, but lately I've been giving the cars away to the kids when I'm done with them. Used cars aren't worth much anyway - the tax would not be significant compared to the depreciation.
I used to take just mileage, but now that I don't drive much, I'm set up for depreciation. I keep track of the mileage but that is just so the accountant can make a pro rata calculation of what is business use and what is personal use to calcalute the depreciation. AFAIK, you can't take mileage and depreciation.
If you could deduct the lease and take the mileage, that could be a pretty good deal. That probably means you can't do it .....
Sorry I kind of snapped. That's the bad thing about the Internet. What a person says can be read however the reader interprets it.
No biggy
Here's a pretty good read on leasing for business:
http://www.smartmoney.com/smallbiz/askedandanswered/index.cfm?story=20050809
http://www.smartmoney.com/smallbiz/askedandanswered/index.cfm?story=20050809
Yep, sorry I haven't updated this thread.
I went ahead and accepted their offer (same numbers as I posted above). I put $200 down as a commitment because they were going to have to do a dealer trade. They found me a truck and it's actually still in freight and it's heading to a dealership that is about 110 miles away. Delivery is supposed to be next week sometime so hopefully by the end of next week I'll have possession of it.
I can't thank you guys enough for all of your help. As soon as I get it home and cleaned up, I'll be sure to post pics of it.
Thanks for all the help fellas!
I went ahead and accepted their offer (same numbers as I posted above). I put $200 down as a commitment because they were going to have to do a dealer trade. They found me a truck and it's actually still in freight and it's heading to a dealership that is about 110 miles away. Delivery is supposed to be next week sometime so hopefully by the end of next week I'll have possession of it.
I can't thank you guys enough for all of your help. As soon as I get it home and cleaned up, I'll be sure to post pics of it.
Thanks for all the help fellas!
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