Insurance for Tesla Lease for Business Deduction

[MsElectric]

We are in the final stages of finalizing our lease arrangements and for tax purposes we are going to lease our Model S as we can use it as a business deduction with our company. When I called our insurance agent (State Farm) to inquire about leasing a Model S and when I said it will be leased for my business she hinted that it will have to be done separately thereby most likely disqualifying me for a multi car discount for our other car and possibly having to pay higher for both cars.

How have others handled this? I heard that when you lease a Tesla for a business deduction, tesla sort f still considers the car to be a Personal Lease but with the businesses' name added to the lease paperwork so that your business can register the vehicle with the MVA. How does this affect your insurance? Can you still get insurance for the car under your personal policy since your name is on the lease or do you have to get special business insurance?

I appreciate any insight from someone who has been through this route...

 

[tdelta1000]

We are considering this same route and some insight would be helpful.

 

[JMG]

Agent in Texas here, so take it with a grain of salt as I am not licensed in New York or with State Farm. But if a personal lines customer of mine called and said, "Hey I'm leasing a Tesla in my company's name for tax purposes." That would elicit a groan from me, because I cannot add a vehicle that is titled or leased to a business to a personal auto policy. That would require a separate commercial auto policy in the name of the company. Therefore, you are forgoing your multi-vehicle, multi-policy (homeowners) discounts etc on the Tesla. Which you will need, because the Model S is fairly pricey to insure. Not to mention, a commercial auto policy is inherently more expensive than a personal auto policy.

Here are my .02. I, like you, am going to be writing this off as a business expense. I'm buying it in my own personal name, but my CPA will be depreciating it on my taxes as a business expense since I use the vehicle in my business. So I'm still able to add it to my personal auto policy since I own it, I'm just not paying for it, my business is. Hope that helps.

 

[MsElectric]

Agent in Texas here, so take it with a grain of salt as I am not licensed in New York or with State Farm. But if a personal lines customer of mine called and said, "Hey I'm leasing a Tesla in my company's name for tax purposes." That would elicit a groan from me, because I cannot add a vehicle that is titled or leased to a business to a personal auto policy. That would require a separate commercial auto policy in the name of the company. Therefore, you are forgoing your multi-vehicle, multi-policy (homeowners) discounts etc on the Tesla. Which you will need, because the Model S is fairly pricey to insure. Not to mention, a commercial auto policy is inherently more expensive than a personal auto policy.

Here are my .02. I, like you, am going to be writing this off as a business expense. I'm buying it in my own personal name, but my CPA will be depreciating it on my taxes as a business expense since I use the vehicle in my business. So I'm still able to add it to my personal auto policy since I own it, I'm just not paying for it, my business is. Hope that helps.

Brilliant! That absolutely makes sense. Thanks for sharing your situation. Are you leasing or buying the vehicle outright? I though if you buy and write off the depreciation under your business there is very low limit of something along the lines of $3,000 that you can depreciate in a given year due to a "luxury vehicle" provision in the tax code. This is why I figured it is better to lease the vehicle rather than buy it. You can go through $3,000 of depreciation in just 2-3 months with a Model S and I wanted to be able to write off as much of the depreciation as possible...

This is where I got the limit of only being able to depreciate about $3,100 if you "buy" the car rather than lease it:
https://turbotax.intuit.com/tax-too...-Taxes/Business-Use-of-Vehicles/INF12071.html

We too are leaning towards an 85D BTW

 

[cpa]

Ms,

I suggest that you hire an income tax professional to walk you through the rules of depreciating or leasing business vehicles. If you like to prepare your own returns, at the least hire a professional to review your returns before you file them. Income tax professionals (and no disrespect to H&R Block and their ilk--they have their niche, but Schedules C/F/E or partnership/corporate/fiduciary returns ain't among them) know the rules and regulations better, and can advise you for proper documentation. They can see if you have missed something, or if you have reported something incorrectly or inaccurately. I have seen dozens of self-prepared returns (usually with Turbo Tax) where the taxpayer did not understand the intent of the question-and-answer format and made some sizable errors.

Right now most professionals are slow--so you could easily find a good one near you for an hour's consultation, and he/she could lay out the advantages and disadvantages of buying or leasing. You would then have a better understanding and make a more informed decision that suits your situation. A couple of hundred bucks or so is pretty cheap insurance to structure the transaction best for you and at the same time know what documentation is required to maintain a business automobile in case of one of those pesky examinations.

(Disclaimer, I am not soliciting anything by my response. I am merely offering what I think is a sensible solution to this situation!)



Enjoy your Tesla!

 

[MsElectric]

I included that article because it referred to the $3100 figure that I had read about elsewhere. I certainly do have a CPA who does both my business and personal taxes and he suggested that I could still depreciate the car but we didn't talk too much about to what extent as we were focused more on getting my taxes filed.

I don't understand why this has to be so complicated though. Is there a way to get around the $3100 limit for depreciation? I know, I know I should talk to my CPA but if anyone has taken this route already and figured out the most advantageous way to proceed I'd love to hear the details and I bet so would others in my situation.

It seems leasing under the company's name is really going to complicate my insurance and I will end up loosing my multi line discount for our two cars and then end up paying more for my home and car insurance by unbundling one of the cars and moving it to a business policy...

In any case when I figure this all our I will make a follow up post on what I ended up doing any why.

Ms,

I suggest that you hire an income tax professional to walk you through the rules of depreciating or leasing business vehicles. If you like to prepare your own returns, at the least hire a professional to review your returns before you file them. Income tax professionals (and no disrespect to H&R Block and their ilk--they have their niche, but Schedules C/F/E or partnership/corporate/fiduciary returns ain't among them) know the rules and regulations better, and can advise you for proper documentation. They can see if you have missed something, or if you have reported something incorrectly or inaccurately. I have seen dozens of self-prepared returns (usually with Turbo Tax) where the taxpayer did not understand the intent of the question-and-answer format and made some sizable errors.

Right now most professionals are slow--so you could easily find a good one near you for an hour's consultation, and he/she could lay out the advantages and disadvantages of buying or leasing. You would then have a better understanding and make a more informed decision that suits your situation. A couple of hundred bucks or so is pretty cheap insurance to structure the transaction best for you and at the same time know what documentation is required to maintain a business automobile in case of one of those pesky examinations.

(Disclaimer, I am not soliciting anything by my response. I am merely offering what I think is a sensible solution to this situation!)



Enjoy your Tesla!