i should open a small business , so i can write off my car payments haha

 

Yes, I have a home-based business on the side and that allows me to write off my lease payments as a business expense.

 

Me too...except it is a brick-and-mortar business. There are definitely positives to owning a business.

 

Yep, the tax advantages alone make it worth it.

 

so say i make up some kind of ebay home business , would i be able to write my car off

 

I'm not sure about Canadian law but here you must thoroughly document that you use a leased car for business purposes. Mileage, fuel, etc. Then you can write off the lease payments. Otherwise you stand a chance of getting audited.

 

I think I've said it before, the write-off thing is something even Seinfeld spoofed on......Kramer told Jerry to write-off his broken VCR, but they found out neither knew what a write-off really was.

Anyhow, did anyone look at it this way? Say I work for a corporation and I get 80k, with my benefits costing the co. 32k per year.

Realistically, if I own my own business, I'm going to pay myself more than the going rate, or I wouldn't do it. So I'm going to give myself a salary of easily 150+ in the above scenario. It's my own co., and I'm running it. So I could conceivably lease a car as well as it's yet another benefit to me. That payment is coming out of my own pocket, just as it would a purchase. Tax benefit or write-off, again, I have to be paying taxes in the first place for that to be an advantage. And in the US, there are guidelines otherwise why not lease a E63 AMG?

Very importantly, my business has to be successful for me to pay myself 150k and get the car. If there were a board, then I may not be able to pay myself that salary, the board may say you're worth 80k plus benefits in the outside world, why are we paying you 150k? And they could nixx the car as well.

My point is for someone to have replied they should start their own business so they can write-off the car payments isn't a valid reason to do so....

It's like people complaining that doctors golf on Wed. afternoons. Why not? It's their own business and the $250/hr. that they're not making while golfing is coming out of the partnership's revenues. FYI I've done this with executives before on company time, and that IS coming out of the corporation's revenues...not the exec's own pocket. my .02

 

I think you may be confusing some "taxes" that this eBay business would pay, vs. your own personal income tax.

I will say this one million times, do not make a decision based on tax consequences. Make a decision based on the merits of the proposition. There are so many instances where a tax benefit/offset does not begin to offset the negatives in a proposition.

 

If you have a legitimate business and use your vehicle for business purposes, then yes you can use your lease payments as an operating expense and write them off. I keep all of my receipts, track my mileage, etc just in case Revenue Canada decides to audit me.

A legitimate business can be alot of different things.....from a brick and mortar business like N50, to a home-based business like mine.

 

Make a decision based on both and give each their proper weight. Thats how decisions are supposed to be made.

Also remember that you can only tax deduct income you earn, you can't start a business and earn no income and then expect to tax deduct your car. People get messages so confused so I will sum up the point of this thread.


IF YOU GET TAX BENEFITS FROM LEASING A CAR, not if you want to come up with some weird scam, the 335i and G35 much closer in price than their MSRP's would have you believe.

 

Just reading these forums here about the 2007 G and thought I'd chime in regarding the cheap leasing rates from BMW right now. I currently own a 2004 G35 sedan that I bought 3 years ago...Recently, I've decided to get a new car and was REALLY thinking about the 2007 G. I just love the new style and was really close to purchasing one. However, I was trolling around the net and found the lease rates for the 2007 530i and that really got me interested. Then I started to do some investigations and calculations...I bought my G back in 2004 (fully loaded MSRP was ~ $39,000, got it for $400 over invoice) with $9000 down and a great APR of 3.89%. My payments are $531.99 for 60 month loan. Right now, BMW is heavily subsidizing the 5ers because of the upcoming 535's. The money factor is 0.0005 (1.2% APR) for the 530 and with BMWFS that can be bought down with a maximum of 7 security deposits (all of which are refundable) to a mere 0.00008 (0.192 APR). Therefore, I recently signed the following deal:

MSRP $60,040 (sport, premium, nav, logic 7, sirius, park dist control, power sun shade, comfort access, steptronic auto, voice activation)
Cap $57,297 (all dealer fees except for lic & reg, including profit and inception fee)
Residual 60% (15K 36 month)
Monthly Dep $590.83
Interest $7.47
Tax $49.36
Total Monthly payment $647.99
$0 Down (zero cap reduction) and $4,550 in refundable security deposits

Withe the security deposits, I'm basically investing $4550 to get the reduction in the MF rate, savings of $53.19/month in interest and $1,914.89 over the life of the lease and I'm getting that back at the end of my lease. That comes to ~12% rate of return with no tax! I don't know what kind of deals that Infiniti is running for the G now...But I don't think that I could get a G for significantly lower than that. I use to be in the camp that leasing is just not financially wise...However, after extensive calculations...To truly benefit from owning a car you'd have to keep it for at least 6-8 years to realize the depreciation gains. Anything after that is a bonus. However, after the 4th year the maintenance costs will definitely rise with any car (except for Accords and Civics, those things last forever!). In this case, due to the fact that the MF is so low, it will be a great lease to buy situation because I'm only paying $7.47 a month in finance charges for the depreciating part. If I was to finance a car, I'd be paying interest on the full value. And if I REALLY like the car after 3 years, I could ask BMW to CPO it and buy it for lower than the residual because the new model would have been out for a couple of years and they'll have plenty of used 530's around. I could pay cash for it, but in this case it's just not a wise decision. Maybe after owning the car for a couple of years, I may not truly LOVE it. Now, I do own my own business and I can write off my leases. But that wasn't the main decision. I've owned MANY cars over the years and I can only think of once (97 prelude) where I kept it for more than 5 years. In addition, with CA leases, you only pay taxes on the depreciation instead of the whole purchase. In addition, I also do not need to worry about maintenance as it is provided for the first 50,000 miles. God forbid, if my car was in a major accident, I do not have to worry about taking the hit with the value depreciation, I'll just turn the car in at the end of the lease. I also don't have to worry about selling the car or trade-in values if I ever want to get rid of it. I was going to sell my G, but it was going to be too much of a hassle. I could pay it off, but I'm earning more by keeping it in the bank compared to my APR. So I'm giving the G to the girlfriend who is taking over the payments. In hindsight, I should have leased my G because I'm the type who changes cars often every 3 years or so, but you live and learn. There are many good points brought up here regarding owning the car. However, going forward, I probably will only buy Accords, or something in the same class and lease everything else...Even though I could afford a $60,000 car payment, but I do not believe in investing in an depreciating asset anymore. So, the lease vs. buy isn't a clear cut question. All depends on the deal that you're getting and what preferences you like. Sorry for the long ramble...I still love the new G!

 

You are exactly correct. This also applies to any investment decision. Do not hold or buy the underlying asset unless you would without any tax benefits.

 

Hello,
I was looking for an '07 G35S 6MT with Prem only. I wanted a 15k / 36months w/ nothing down. I was getting lease prices of more than $600 - and I would have to pay maintenance. This seemed very high to me and it drove me to look elsewhere.

So I ended up at BMW:
2007 BMW 335i Sedan
6 speed manual
Premium Package
Cold Weather
Sport Package
Metallic Paint

MSRP: 44920
Invoice: 41325
MF: .00101
Residual: 61%
Cap cost: 42400 (1075 over invoice)
36 months / 15k per year.
Monthly: $525

1st payment: $525
Security: $4400 (8 MSDs - Fully refundable and you don't lose them if you total the car)*
Sales Tax: $1280 - Rolled into payment
Registration: $185
Bank Fee: $625
Total at signing: $5735

To be delivered in March '07 (at my request - I don't need one for a while)

I'm pretty happy with this deal but I will miss the size of the G35. I love my current '04 G35 (so much so that i extended the lease for five months), but will need a new car in March '07.

I tend to travel with a number of people so the larger back seats of the G35 are a serious loss. But the pricing for the lease of the G35 just didn't make sense to me.

I am leasing this as a business lease for my business so it will be tax deductible also.

I would guess that since BMW is offering such aggressive rates with the residuals and the MF that Infiniti will lose a number of people if they don't do something about it.

Oh well. I really will miss the Infiniti.

- SR

* each MSD drops the MF by .00007 up 7 total drops, so a .00049 drop in the MF total. You need an extra MSD as the initial, hence the 8 total MSDs...

 

I got the G35 Sedan I always wanted..... Now hearing what the 2008 Coupe
might offer, I plan on definitely owning a future infiniti coupe and have it complement my Infiniti 4 door...