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More Model 3 changes and leasing now available

voip-ninja

Give me some sugar baby
Mar 15, 2012
4,502
5,579
Colorado
So I am contemplating leasing because I am coming from another lease and I like switching cars every 3-4 years. How would I be able to deduct for business expense if I have a regular w2 job that I just drive to the office and back home? I do coach soccer (1099) and I own a small video highlights company for athletes. Both of these only provide $10,000-$15,000 in additional income per year on top of my W2 job income. So I have to pay taxes on these side job/business which I could take deduction by using Tesla but only up to a certain amount.

Can you do math? If so don't lease unless you are worried about potential long term resale and want to insulate yourself from that risk.

You can only write off the portion of the car that is directly used for business purposes, you cannot write off any commuting mileage. It would probably be easiest for you to take the .59/mile deduction and keep a log of your business miles. You can then take this deduction whether you lease OR buy.
 
I hope everyone has been well! It looks like my day might be happily whacked.

Will plead guilty to not reading a single post in this thread (yet) and simply showing up to say woo hoo.

The majority of my posts before this one was lamenting about the lack of a Model 3 Lease but understanding why.

I simply do not drive enough anymore to justify an expensive car and since the passing of my dad my most important role is to be a responsible daughter. My former Tesla was 40% more than my moms mortgage payment. Combine that with lots of changes to my driving time and it's a pass, but, man, I miss my Tesla. I turned it in (leased) end of November and it was a sad moment when they asked me to erase my car.

As an aside, I have been tooling around in a 2017 Ford Edge. It's a program called Drivecanvas and it lets your lease cars month to month. It includes maintenance and insurance. It's been nice actually to have this program while I figured out my next move car wise.

My next move was going to be waiting on the 2019 Audi Q3 Sportback which looks to be November or maybe into 2020. Now, with this announcement (I did not see this happening till 2020) I will today have one eye on this board, one eye on the Tesla website and one on The Masters.

Damn. Going to need another eye!

Lots of clicking and thinking are in my future today!

Leslie
 

balto

New Member
Apr 12, 2019
4
11
Canada
I don’t think it’s that black and white. If you are self-employed, earn a high income (let’s above $300K), and live in California, you are likely paying over 50% in Federal and CA income taxes. If you use your car exclusively for business, the entire payment, including the down payment, can be deducted as a business expense. So you are effectively getting a 50% discount on your lease. If you purchase the car, you can only deduct the depreciation on the car, and it’s over a longer period of time so it’s a much smaller deduction. For people in this category, leasing can be very attractive.


Good point, I have the same situation as your example, except I don't live in California. I don't know about California but some other places there is a cap on the monthly payment you can put on your business vehicle. As my accountant puts it, "Well, people would then just get a Bently, wouldn't they?". he says he can only ride-off about a $300 a month on car lease costs.
 
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Can you do math? If so don't lease unless you are worried about potential long term resale and want to insulate yourself from that risk.

You can only write off the portion of the car that is directly used for business purposes, you cannot write off any commuting mileage. It would probably be easiest for you to take the .59/mile deduction and keep a log of your business miles. You can then take this deduction whether you lease OR buy.

Okay here's my math, its obviously estimates but I am pretty sure its close numbers.

Can any of you give me input I am torn between Leasing or Buying, I am coming from a lease, I like to usually change every 3-4 years however I do see Model 3 as being fun and me able to stay with it longer but I don't really see a huge advantage of the lease if it's really only about 1-2k less in total out of pocket cost over 3 years compared to a 72 month loan payment and paid costs at 36 months. Also the 3750 refund for buying makes buying actually cheaper... I think the question is if I buy and I decide to trade it..would I really be upside down? Based on amortization I shouldn't be...and if I break even...its the same as leasing..since leasing doesn't give you money towards another vehicle..

Lease Black M3 LR AWD 15k miles with AP
Due at signing $5376. $681/month
Total payments in 36 months $35222.65
I included 7.95% sales tax on $50,700 price of car on lease
and about $650 per year of Prop Taxes



Buy Black M3 LR AWD with AP
Down payment $5376. $714/month (Tesla financing, so a little less with CU financing)
Total payments by 36th month $36410.65
I included 7.95% sales tax on $50,700 price of car on lease
and about $650 per year of Prop Taxes

Plus $3750 refund for purchase, which would actually drop the total payments for buying lower than leasing I believe. Unless the sales tax is paid partially for lease I don't see how leasing is better even if I was to trade in the M3 with a 72 month loan at the 36 month mark.


Difference between both by 36 months is $1188. Does sales tax for the lease
get charged at the full 7.95% of the total cost of car or only for the
portion of the depreciation you pay on the car for 36 months? If you only
pay for a part of the car cost then it would be a much bigger savings compared
to buying.


Any input would be greatly appreciated
 

SomeJoe7777

Marginally-Known Member
Mar 28, 2015
2,283
6,112
Houston, TX
So I am contemplating leasing because I am coming from another lease and I like switching cars every 3-4 years. How would I be able to deduct for business expense if I have a regular w2 job that I just drive to the office and back home? I do coach soccer (1099) and I own a small video highlights company for athletes. Both of these only provide $10,000-$15,000 in additional income per year on top of my W2 job income. So I have to pay taxes on these side job/business which I could take deduction by using Tesla but only up to a certain amount.

Commute to/from your residence is specifically excluded for business write-off. In your situation, you could claim trips from the W-2 job to the soccer coach job, or trips from one job to another, but that's it. If the trip starts or ends at your residence, it's not deductible.

Furthermore, to do this correctly, you actually need to establish a business entity (sole proprietor or LLC), charge the business miles to the business entity (which gets recorded as a business expense on the 1065), and then have the business entity reimburse you. It's a red flag if you deduct the mileage directly off your own 1040.

Unless you have a business where you drive a lot (for example, visiting client sites because you're in sales, or visiting many different sites of your business such as a vending machine operator who has 20 locations), you cannot deduct enough to make the lease come out ahead of purchasing the vehicle.
 

vickh

Active Member
Dec 16, 2018
3,718
880
az
I had a Model X 60D which is a limited 75D.

Yes I was able to charge at 100%. I did eventually go to 75D to get the 1 second faster 0-60.

I'm ok with slower 0-60 (my lead foot=speed tix :) ) so seems like I'll get everything other then that since the interior is the same.

And I can possibly unlock in the future like MS/X.

Now the only question is will they make me cancel and refund 2.5K or hopefully just transfer
 
Commute to/from your residence is specifically excluded for business write-off. In your situation, you could claim trips from the W-2 job to the soccer coach job, or trips from one job to another, but that's it. If the trip starts or ends at your residence, it's not deductible.

Furthermore, to do this correctly, you actually need to establish a business entity (sole proprietor or LLC), charge the business miles to the business entity (which gets recorded as a business expense on the 1065), and then have the business entity reimburse you. It's a red flag if you deduct the mileage directly off your own 1040.

Unless you have a business where you drive a lot (for example, visiting client sites because you're in sales, or visiting many different sites of your business such as a vending machine operator who has 20 locations), you cannot deduct enough to make the lease come out ahead of purchasing the vehicle.

Look above I posted the math I have in Buy vs Lease. Any input?
 

MXWing

Well-Known Member
Oct 13, 2016
7,747
24,188
USA
"Well, people would then just get a Bently, wouldn't they?". he says he can only ride-off about a $300 a month on car lease costs.

Taking only this comment into context, your accountant is an idiot.

You can only deduct against your profits.

The money into a Bentley could have gone in anything else.

The right way to do it if you qualify is to get a Model X and take advantage of the Hummer deduction.
 
me 2 :) this is why I keep waiting. Now i'm thinking of getting a SR since it's a software limit battery and everything else is the same as SR+

Won't the software limit protect the battery at 100% charging. Maybe Model S software limit battery owners can chime in...
That’s what I have heard as well! Maybe keep waiting till FSD is freeeee haha. I agree SR comes with premium interior now and AP standard, might be the best option if range isn’t a concern.
 
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SomeJoe7777

Marginally-Known Member
Mar 28, 2015
2,283
6,112
Houston, TX
Difference between both by 36 months is $1188. Does sales tax for the lease
get charged at the full 7.95% of the total cost of car or only for the
portion of the depreciation you pay on the car for 36 months? If you only
pay for a part of the car cost then it would be a much bigger savings compared
to buying.

Sales tax does get charged on a lease. However, you can either pay for all of the sales tax up front, or you can have the sales tax rolled into the lease payments. You'll pay the same amount over the life of the lease, but the difference is what you can deduct. In many states, you can deduct the sales tax you paid. If you pay all of it up front, you may be able to deduct all of it the first year, although now there is a limitation of a $10,000 maximum deduction for sales tax + property taxes in the new federal tax laws, so trying to take the whole deduction in year 1 may not be possible if you have other sales and property taxes to deduct.

This limitation may not apply if the business entity leases the vehicle instead of you.
 

CCIE

Member
Aug 31, 2017
363
684
CT
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vickh

Active Member
Dec 16, 2018
3,718
880
az
It's unclear what the off-menu price of the SR is. The announcement says all models now have AP at an increased cost. So, SR may be $37k now.
That’s what I have heard as well! Maybe keep waiting till FSD is freeeee haha. I agree SR comes with premium interior now and AP standard, might be the best option if range isn’t a concern.

I'm not in a hurry for FSD. I wanted the premium interior and it makes the decision not to get a CPO MS easy b/c the price difference.

I will call my OA and if it If it's 37K for the SR I'll make the switch. I hope he gets the same "commission" unlike traditional dealers...
 
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MXWing

Well-Known Member
Oct 13, 2016
7,747
24,188
USA
We'll see. I'd believe the blog post over an unnamed spokesman. The blog post says all version of the M3 get AP at an increased cost.

I've done the math.

It would be a poor decision NOT to take AP for $2k.

3SR + EAP = $37,000 is s a great deal.

With that said... it's not really a 35K Model 3 if you were forced to take EAP - even at bargain rates.
 
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Bottom line is that they thought hundreds of thousands of people would want the SR and they don’t. Why? Because if you have $35k then you also have $40k and probably $55k.

Ugh. This again.

Going to go out on a limb here and guess your income is well into six figures. Out amongst us peasants, I'm fairly confident that twenty thousand dollars difference is quite significant to a lot of buyers. If it weren't, there wouldn't be Hyundai Accents sold every day. Or do you think some people are just frugal for amusement sake?

Just a tip, you sound like an elitist ass when you say stuff like this.

Any person with half a brain knows that $35k is not a magic number that makes something affordable.

It's not, but you know there is this inconvenient fact that Elon told the world he would be selling $35K Teslas. He technically is, but just barely, and who knows for how long. It's a far cry from "finally a Tesla for the masses".

Don't fault folks for wanting a $35K Tesla when it was Tesla who told them it would be so. They painted themselves into this corner all on their own, and so this is where they are now.

Tesla, I know you aren’t listening so I am talking to myself here. Selling a car at cost and putting all the latest tech in it so no one wants your high profit flagship models was mistake 1 (is this goodbye for s and x?). Selling a car that people will buy all day in performance and dual motor in a cheapo $35k-$40k zero profit version was mistake 2. You could have sold many of those customers $60k versions and made tons of profit. Instead, the bargain buyers poured in and you lost money.

They wouldn't have had to worry about any of this if either A) Tesla's accountants were presumably any good at predicting costs only two years into the future, despite being in the business of selling cars for five full years before then at that point, or B) Elon not just making sh!t up out of thin air, like how soon he will be able sell something and at what price.
 
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Sales tax does get charged on a lease. However, you can either pay for all of the sales tax up front, or you can have the sales tax rolled into the lease payments. You'll pay the same amount over the life of the lease, but the difference is what you can deduct. In many states, you can deduct the sales tax you paid. If you pay all of it up front, you may be able to deduct all of it the first year, although now there is a limitation of a $10,000 maximum deduction for sales tax + property taxes in the new federal tax laws, so trying to take the whole deduction in year 1 may not be possible if you have other sales and property taxes to deduct.

This limitation may not apply if the business entity leases the vehicle instead of you.

Yeah, sales tax is 4030.65 on $50,700 where I live. Property Taxes us about 650 if I am not mistaken and I wouldn't pay that the first year cause cars purchased after a certain date in the current year don't pay prop taxes until the following year. However being married and having a 24,400 standard deduction..I don't see how taking the sales tax will be more than the standard deduction unless I don't know of any other deductions other than mortgage interest, property taxes, health.
 

MXWing

Well-Known Member
Oct 13, 2016
7,747
24,188
USA
It's not, but you know there is this inconvenient fact that Elon told the world he would be selling $35K Teslas. He technically is, but just barely, and who knows for how long. It's a far cry from "finally a Tesla for the masses".

Don't fault folks for wanting a $35K Tesla when it was Tesla who told them it would be so. They painted themselves into this corner all on their own, and so this is where they are now.

35K in 2016 money is a shade over 37K today.

Tesla can legitimately sell a 37K Model and claim it was the 35K car advertised. Is it late yes, but still here regardless.

The optics, people's ignorance at economics, the press, etc make this a non starter but the argument is is 100% valid.
 
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Cnasty

Active Member
Jun 20, 2016
1,020
689
Dallas
Hardware 3




I just called Tesla Sales to try and downgrade my Standard Plus to a Standard and they mentioned I needed to speak with the person who sold me the vehicle (even though I purchased it online). She couldn't or didn't know how to help. Most likely the latter, since she also mentioned they were still selling the "standard interior", which I'm pretty sure has been scrapped entirely with the news. I think the news dropped probably had surprised the sales people too, so don't be too surprised.

Oh well, looks like I've gotta make a drive to a Tesla store. Does anyone know when "the weekend" begins in the Tesla world? Is that considered to be Friday or Saturday?

I am in the same boat and curious how do I facilitate this call. I am ok with "downgrading" my SR+ for money back in my pocket and the possibility of adding AP. I got the item I wanted the most which was white interior.
 

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