Lots of generalizations in this post, which doesn't really help the OP in making a decision.
This is an expensive acquisition, whether by lease or by purchase/finance. Talk to your tax professional to find out the pro's and con's of both leasing and purchasing (with and without financing).
In my case, because I was looking specifically for a means of reducing my taxable income earned through my professional business, my CPA strongly recommended that I lease my model S, for the following reasons:
1. You can deduct the monthly leasing fee, sales tax, maintenance and insurance as a business expense. Any personal usage must be reimbursed. As my usage is nearly 100% for business, this is an easy book-keeping item.
2. You lose the $7500 tax credit. However, if you purchase, you have very limited depreciation, as this is a luxury car (I think the depreciation averages out to about 8% per year, for tax purposes. Any guess if the market value depreciates more quickly?!?). Additionally, with a purchase, you have to pay for all expenses with after-tax income, and then seek reimbursement for mileage.
These two items tilted my decision quickly to leasing, when I coupled my CPA's advice with the fact that this wonderful car is a new technology, nearly all computer-based, and possibly obsolete by the end of my 3 year lease term. I opted for the 15,000/year, however after 3 months of possession, I have less than 3000 miles. (If you drive significantly more than 15000/year, leasing is probably not an option for you).
7 years ago I purchased (and financed) my first real "dream car", a 2008 Porsche 997 C2S cabriolet. Beautiful in every way imaginable. After 3 years and 12000 miles, I sold it to a dealer from Toronto. The car depreciated at a market value of nearly $20,000/year. My taxable depreciation was less than $20,000 for the 3 years of ownership. It was a thoroughly poor financial decision to purchase that car, and one that I personally, will never make again.
Leasing is what worked for me, for a very specific reason. Maybe it won't work for you - you don't need the business expense; you're retired and you love to drive across the country; you're in the top 0.5% of all income earners and you have cash to burn/play with. But, of all the advice I can give, the most important is: TALK TO YOUR CPA.
This is an expensive acquisition, whether by lease or by purchase/finance. Talk to your tax professional to find out the pro's and con's of both leasing and purchasing (with and without financing).
In my case, because I was looking specifically for a means of reducing my taxable income earned through my professional business, my CPA strongly recommended that I lease my model S, for the following reasons:
1. You can deduct the monthly leasing fee, sales tax, maintenance and insurance as a business expense. Any personal usage must be reimbursed. As my usage is nearly 100% for business, this is an easy book-keeping item.
2. You lose the $7500 tax credit. However, if you purchase, you have very limited depreciation, as this is a luxury car (I think the depreciation averages out to about 8% per year, for tax purposes. Any guess if the market value depreciates more quickly?!?). Additionally, with a purchase, you have to pay for all expenses with after-tax income, and then seek reimbursement for mileage.
These two items tilted my decision quickly to leasing, when I coupled my CPA's advice with the fact that this wonderful car is a new technology, nearly all computer-based, and possibly obsolete by the end of my 3 year lease term. I opted for the 15,000/year, however after 3 months of possession, I have less than 3000 miles. (If you drive significantly more than 15000/year, leasing is probably not an option for you).
7 years ago I purchased (and financed) my first real "dream car", a 2008 Porsche 997 C2S cabriolet. Beautiful in every way imaginable. After 3 years and 12000 miles, I sold it to a dealer from Toronto. The car depreciated at a market value of nearly $20,000/year. My taxable depreciation was less than $20,000 for the 3 years of ownership. It was a thoroughly poor financial decision to purchase that car, and one that I personally, will never make again.
Leasing is what worked for me, for a very specific reason. Maybe it won't work for you - you don't need the business expense; you're retired and you love to drive across the country; you're in the top 0.5% of all income earners and you have cash to burn/play with. But, of all the advice I can give, the most important is: TALK TO YOUR CPA.
