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Buy vs Lease car for my LLC

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  • Buy vs Lease car for my LLC

    So if I was an independent contractor with my own LLC does it make more sense (for a car used for business purposes) to lease a car or buy a car for tax purposes. I'm in the highest tax bracket.  Thanks!

  • #2
    Lease payments are deductible so I think there can be an argument for leasing if you are interested in driving new cars every 3 years.

    If you are planning on purchasing a car (particularly used) and truly driving it into the ground, I think this will still be the better way to go financially.

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    • #3
      you only save the business portion on lease or purchase.  you ca  section 179 for cars if you get a gas guzzler, but when you sell it's a pain you have to recapture.  that can be a pain, think my accountant charged me about 400.00 when i took my business car i purchased out of use.  if you are in the highest bracket i say lease something you like that is reliable, that way you can purchase at the end of lease for your spouse, kids, parents etc.

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      • #4


        So if I was an independent contractor with my own LLC does it make more sense (for a car used for business purposes) to lease a car or buy a car for tax purposes. I’m in the highest tax bracket.  Thanks!
        Click to expand...


        First of all, you need to compare the cost of leasing versus buying, considering the length of time you tend to keep a car, etc. This is something your CPA should be able to assist with.

        Next, you'll need to calculate the tax savings with each method. If you buy reasonably priced cars and drive them a lot and a long time for business, purchasing would probably be better than leasing because you can deduct an unlimited amount for mileage during the time of ownership. You get $1.08 in deduction this year for every 2 miles you drive and if you drive a lot for business, it can really add up fast.

        There is no easy rule of thumb - you need to dig deeper and compare the cost-benefits of each.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5





          So if I was an independent contractor with my own LLC does it make more sense (for a car used for business purposes) to lease a car or buy a car for tax purposes. I’m in the highest tax bracket.  Thanks! 
          Click to expand…


          First of all, you need to compare the cost of leasing versus buying, considering the length of time you tend to keep a car, etc. This is something your CPA should be able to assist with.

          Next, you’ll need to calculate the tax savings with each method. If you buy reasonably priced cars and drive them a lot and a long time for business, purchasing would probably be better than leasing because you can deduct an unlimited amount for mileage during the time of ownership. You get $1.08 in deduction this year for every 2 miles you drive and if you drive a lot for business, it can really add up fast.

          There is no easy rule of thumb – you need to dig deeper and compare the cost-benefits of each.
          Click to expand...


           

          Thanks for your advice. I would usually consider driving a car to the ground. But with upcoming self driving cars (and my long commute). I'm considering trading in a car once self driving cars come around to being fully autonomous. I'm guessing their upgrades would be meaningful every couple of years at that point as they'll be more reliably self driving and I can work in the car while I'm being chauffeured to work by the car.

          Comment


          • #6








            So if I was an independent contractor with my own LLC does it make more sense (for a car used for business purposes) to lease a car or buy a car for tax purposes. I’m in the highest tax bracket.  Thanks! 
            Click to expand…


            First of all, you need to compare the cost of leasing versus buying, considering the length of time you tend to keep a car, etc. This is something your CPA should be able to assist with.

            Next, you’ll need to calculate the tax savings with each method. If you buy reasonably priced cars and drive them a lot and a long time for business, purchasing would probably be better than leasing because you can deduct an unlimited amount for mileage during the time of ownership. You get $1.08 in deduction this year for every 2 miles you drive and if you drive a lot for business, it can really add up fast.

            There is no easy rule of thumb – you need to dig deeper and compare the cost-benefits of each.
            Click to expand…


             

            Thanks for your advice. I would usually consider driving a car to the ground. But with upcoming self driving cars (and my long commute). I’m considering trading in a car once self driving cars come around to being fully autonomous. I’m guessing their upgrades would be meaningful every couple of years at that point as they’ll be more reliably self driving and I can work in the car while I’m being chauffeured to work by the car.
            Click to expand...


            I wouldnt base any buying/leasing decisions on this. Things always take longer to come to fruition than the hype cycle, and there is actually a great graph that shows this disconnect of hype and actual utility. The more meaningful tech to have in your car that is right now forming a "before and after" paradigm is whether or not it has onboard wifi, imo. Even fancy cars that have poor tech will be shunned in favor of low end ones that do, and this is happening now. Actually thinking of selling my own car to not get caught on the wrong side of this, and, I also would appreciate the wifi.

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            • #7
              I think if you bought a new car and drove it into the ground THEN there may be some autonomous cars.  It's not going to be in the next lease cycle.  Just my opinion, and as much as I like the little features in my car, I don't expect I'll be driven to work soon.

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              • #8
                I've read many articles and user reviews about tesla and their autopilot for long commutes and it works wonders

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