How many of you are showing the Tesla as a business expense? If so, my question is did you buy it under your business name or your own name?
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Putting mine in the Business name also. Hated seeing $7500 of free fed money go to waste but wasn't brave enough to try purchasing and leasing back to my company in fear of the flags that would raise.
In California in the county where I live you can still get around $5,000 in refunds from the air quality control district and the State.Putting mine in the Business name also. Hated seeing $7500 of free fed money go to waste but wasn't brave enough to try purchasing and leasing back to my company in fear of the flags that would raise.
In California in the county where I live you can still get around $5,000 in refunds from the air quality control district and the State.
My CPA said it was a better option for me to do a business lease with 15,000 miles per year for 3 years than to purchase. He said we could write off almost 100% on the lease but not the purchase.
I think there was an option to purchase at the end as well... but in my opinion the technology will improve in 3 years so I will get a newer version in 3 years if they are still around and we like the car after 3 years.
My lease is around $2,100 per month if I remember correctly.
Really looking for more insight right now. Thanks for what you guys have posted. My father has owned his own business for over 20 years. I am trying to figure out how to make the Model S the most attractive to own. He is not attracted to expensive cars and prefers to have a good deal.
I have looked into things like; Accelerated deprecation, Standard mileage deduction, and Itemized deduction.
Right now I have the Tesla coming to $264*, at Accelerated depreciation (I'll attach the Spreadsheet)
While that sounds great and everything: Part 2
My dad loves to follow Dave Ramsey's financial advice, he doesn't want to borrow a dime. Cash isn't an option right now as: I have two sisters in out of state college, and I'm in the pipe. Any convincing points to make that would bridge the gap would help.
Any thoughts are welcomed!
- Christian
Business Lease vs. Finance 3 YEAR - Google Sheets
*Subject to change as conditions of Mileage, business use, and tax rate change
In California in the county where I live you can still get around $5,000 in refunds from the air quality control district and the State.
My CPA said it was a better option for me to do a business lease with 15,000 miles per year for 3 years than to purchase. He said we could write off almost 100% on the lease but not the purchase.
I think there was an option to purchase at the end as well... but in my opinion the technology will improve in 3 years so I will get a newer version in 3 years if they are still around and we like the car after 3 years.
My lease is around $2,100 per month if I remember correctly.
Christian,
If cash is tight, assuming you can qualify for a lease, monthly lease payments generally will be less than monthly loan payments (depending on the downpayment). Your spreadsheet assumes the depreciation will be deducted in the first 3 years of ownership. That is incorrect. The cost of the Tesla puts it in the "Luxury" car category under Internal Revenue Code Section 280F. The depreciation on Luxury autos is limited to $3,160 for the 1st year (assuming 2014), $5,100 for year 2, and $ 3,050 for year 3. Total allowable depreciation for the first 3 years of ownership will be $11,310 x 70% = $7,917. Depreciation is limited to $1,875 x 70% for years beginning with year 4 of ownership.
When you adjust your spreadsheet for the maximum allowable depreciation, there is a significant tax savings leasing vs. buying. Additionally, your spreadsheet should include the inclusion amount for leased luxury cars based on the Tesla's value when placed in service. Based on the value on the spreadsheet, the amounts are $67 x 70% , 146 x 70%, and 217 x 70% for years 1 through 3, respectively.
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Christian,
If cash is tight, assuming you can qualify for a lease, monthly lease payments generally will be less than monthly loan payments (depending on the downpayment). Your spreadsheet assumes the depreciation will be deducted in the first 3 years of ownership. That is incorrect. The cost of the Tesla puts it in the "Luxury" car category under Internal Revenue Code Section 280F. The depreciation on Luxury autos is limited to $3,160 for the 1st year (assuming 2014), $5,100 for year 2, and $ 3,050 for year 3. Total allowable depreciation for the first 3 years of ownership will be $11,310 x 70% = $7,917. Depreciation is limited to $1,875 x 70% for years beginning with year 4 of ownership.
When you adjust your spreadsheet for the maximum allowable depreciation, there is a significant tax savings leasing vs. buying. Additionally, your spreadsheet should include the inclusion amount for leased luxury cars based on the Tesla's value when placed in service. Based on the value on the spreadsheet, the amounts are $67 x 70% , 146 x 70%, and 217 x 70% for years 1 through 3, respectively.
- - - Updated - - -
Christian,
If cash is tight, assuming you can qualify for a lease, monthly lease payments generally will be less than monthly loan payments (depending on the downpayment). Your spreadsheet assumes the depreciation will be deducted in the first 3 years of ownership. That is incorrect. The cost of the Tesla puts it in the "Luxury" car category under Internal Revenue Code Section 280F. The depreciation on Luxury autos is limited to $3,160 for the 1st year (assuming 2014), $5,100 for year 2, and $ 3,050 for year 3. Total allowable depreciation for the first 3 years of ownership will be $11,310 x 70% = $7,917. Depreciation is limited to $1,875 x 70% for years beginning with year 4 of ownership.
When you adjust your spreadsheet for the maximum allowable depreciation, there is a significant tax savings leasing vs. buying. Additionally, your spreadsheet should include the inclusion amount for leased luxury cars based on the Tesla's value when placed in service. Based on the value on the spreadsheet, the amounts are $67 x 70% , 146 x 70%, and 217 x 70% for years 1 through 3, respectively.
- - - Updated - - -
Elctrek - assuming you use your Tesla exclusively for business, your CPA is correct. As long as the business use is great than 50% and you plan to keep the Tesla for 3 years, the auto related deduction is usually greater with a lease vs. a purchase.
I look at this purchase/lease like a large computer... I see technology changing over the years... hardware, battery etc... I don't want to own old technology.Yes, but the purchase costs you 50% less! If you buy the car, keep a log of the miles for business, and you can deduct that percentage. Less paperwork with the lease.
Buy it in your personal name and claim the $7,500 tax credit. The following tax year, you sell the car on paper to your business which can then claim it as a business deduction. Best of both worlds, no?
Tesla Business Leasing is a joke. I've leased (and purchased) many M3s and other high end vehicles under my business or myself over the past 16 years without a late payment. Dealing with a clueless finance guy (initials **) at Tesla for 2 weeks produced terms of 30% down to get a P85D. The reasoning he said was because Tesla "Business" Leasing does not run business credit, only personal, and he suggested I find a co-signer or get a cheaper Tesla. He even emailed me a link to better understand how credit scores work!
Now with my credit over 815 this was hilarious. Spoke with someone else that had a clue and got approved for 100% covered - minus my $2,500 down.
Tread carefully with any place without much loaning experience.