What are the benefits to leasing a ferrari?

http://ferrarichat.com/forum/showthread.php?t=13498&highlight=ferrari+lease

 

None whatsoever. In fact, there is no benefit to leasing any car. You will hear people spout off about tax advantages and so forth, but, when you lease you don't own and after you count all the lease payments you made without gaining any equity, even after some business use tax deductions, you still come out way behind in the end. FYI,if you use your car on business, you can still deduct expenses, interest and depriciation, plus you own the car when the payments end and can drive it for years with no payments. Not so in a lease.

 

Forget about tax implications, that's just a bonus, if at all.

Look at cost and use of money. 3-7% interest expense per month versus XXX% return in a private company or wherever you have the money.....

Look at closed-end leases to protect against depreciation, accident caused or otherwise. Again....the same equation, more or less.

The last one is risk related as well. I don't have money, per say, so for me to put $ XXX into a car with all the related risks doesn't make a whole lot of sense until such time as it really doesn't matter any more.

Then you go back to recalculate the cost and use of money again.

Leasing is not for everyone, but then, neither is paying cash.

 

Amen...

 

Is there somewhere on line I can get the specific tax guidelines for company vehicles?

 

Exactly right. Tax benefits are bonus and still would need to be compared to the equivalent tax benefits of having your business own the car with associated deductions for operating costs, depreciation, insurance etc.

It is a little complicated to do a proper lease versus buy analysis, but it can be done. That is the only proper way to determine what the best way to own the car is, whether you could pay all cash or need to finance the car.

Many times there are leasing incentives offered by the car companies that are more aggressive than typical purchase financing options, such as low money factors (similar to low or zero interest rate financing), or higher than expected residual values (which reduces the monthly depreciation component in the lease payment and transfers the residual risk back to the leasing company), being the two most common devices after the "capital cost reduction".

Leasing may or may not make sense from a cost of money perspective, depending on the terms of the deal that is offered, but I would limit it to a "conventional" car, in any case, and definitely not a Ferrari. The last thing that you want to contemplate is a major belt service that you need to pay for just before your lease runs out.

Also, it is best applied to a new car, under warranty, that you intend to replace after 3-5 years, even if you retain the option to buy the car at the residual value at lease end.



John

 

Geeze, when will you guys (and a few gals) ever learn? The correct answer to any and all financial/tax questions is that, "It depends."

For example, I believe in paying cash for toys. If you don't have the stoke to buy the toy you want, you have two choices: (1) buy a cheaper toy, or (2) make mo money.

However, I find myself in a situation where I might have to break this rule. Without getting into a lot of detail, I just sold all three of my cars to one individual in exchange for some founder stock in a new company. (My wife has a car. My son has a car. My daughter has a car, but poor ole DrTax just has a bunch of junky British motorcycles.) I will not be able to sell this stock for a year. (I would like it noted for the record that DrTax does not do simple.) Moreover, by the end of the month, I will be fully invested in various other ventures. So I ain't got no money!

Whut's a poor boy to do?

Well, step one of my recovery plan is to buy a street legal - Spec Miata race car. For less than the price of a new hood on my old Maranello, I can play Ricky Racer at street legal speeds (for the most part).

I also put down a deposit on a Challenge Stradale with an October delivery date. Because I'm buying the car at sticker, at a point in time where Stradales are trading for $15 to $20 over sticker, I plan on financing the car with an interest only loan, which is pretty much a short-term lease. Because I'm not sure that I'm going to like the car, I figure that a short-term deal will let me decide if it is a keeper. (You never know a car until you drive it.) If I don't like it, I'm hoping that I can probably sell it for sticker six to nine months later. If I like it, I'll just pay interest until one of my ships come in. (And they will come in, won't they?)

So I'm set right? Course not. I also want a Daytona or a GTC. I haven't figured this one out yet, but like I said, I don't do simple.

Dr "Ain't got no car" Tax

 

forget whether leasing is economical or not since a ferrari is not really an economic choice. i would lease just for the peace of mind that in 3-4 years it will be gone and you dont have to worry about who is going to buy it from you. warantee is over and car goes back without concerns of records, condition, etc. i will never buy an exotic car off warantee again. only lease new for me.

 

You can lease, but it makes no difference with a high end car loan with a balloon payment. If you are financing, go for the best deal possible.

Forget that you will give a Ferrari back at the end of the lease. They put the residual so low, that you will be crazy not to do a private sale or buy out the lease at the end of the lease period.

 

I can't see how a lease is better than buying the car in any way unless you don't have the downstroke. If that is the case, then leasing may be for you but, the leasing company is going to make money and it will be off of you probably during the term and at the end.
The cheapest way to buy anything is with cash. Anything less and you start paying more.
If you are deducting the car for business, then you would need to compare the same scenarios using pre-tax dollars and will you take out a loan and put it on the books as an asset or will you lease and just deduct the whole payment as an equipment lease.
Dr. Tax: C'mon, help everyone out. We know your situation, now go ahead and spill the beans and help everyone out on how to buy that car and get uncle sam to pay for it as much as possible
Gary

 

When the lease is based upon the expected depreciation over time and the interest thereon, it can be an advantage if the car depreciates more than expected at the time the lease is signed. I have only leased one car. In 1985, I leased a 1986 Porsche 944 for a 66 month term. At the time, the leasing agent told me that the only car that depreciated less was the Mercedes 450 SL. My 944 was expected to be worth $14,500 at the end of 5.5 years. It was only worth $9,500 at the end of the term, so I gladly returned it to the leasing company. They would not sell it to me for any less than the $14,500 I was contractually obligated to pay, but turned around and wholesaled it for $7,500! By that time, I had decided to move on.

 

Another factor to consider in this exercise is the effect of a damage repaired vehicle in each context. If the predamage value was quite high and the real/perceived post repair value is low (way easy to do with a non Fcar) the lease may be favoured.

Thank you very much

Fury

 

In Ca there it makes a lot of sense to lease a new Ferrari if you dont plan on keeping it for more than 2 years. If you buy the sales tax must be paid up front (about $18000) on a 200K 360. In the lease you pay the sales tax in every payment and are not responsible for the balance if you sell it. This allows you to save a large chunk of money since I plan on trading it in for a new 430 when my car comes in...I also put the lease in my company for a full write off. Now if you plan to keep the car for more than 2 years there is no reason to lease...I would buy. In other states you get a credit for trade in cars so there is no sales tax burden..that is a totally different story. Leasing sub 100K cars is foolish.

 

As mentioned in a post below this one, sales tax of about 8% is paid up-front, and you never get it back (most cases).

That is over $16k gone...or more. Amortize that over 9 months and it's $1777 month just to pay the sales tax alone on a 9 month flip.

Other issues?

Cheap money = home equity loan, MAYBE tax deductable, interest only, 4% or under.

Lease money "factor" they use? Guess 6.5%? Or am I off. If right, how do you figure the cost? You pay "sales tax" on the payment. Not the purchase.

Then how do you get out. I am not a car sales guy, so would take it to a dealer. Lease flipside is you turn it in. Both have costs

 

I don't have a very complicated tax position, having no maney and an ex wife....

But I think putting the word "Ferrari" anywhere in a tax return to the goverment is a BIG no no.....just my opinion....

Dr. Tax???

 

The bottom line is talk to YOUR accountant. I lease (and have leased) a MB S class for the last four years. Or I should say my P.A. leases it. I deduct 80% of the lease payments as misc. rents. I asked again should I lease or buy:

his answer: blah blah blah, yada yada yada, BS BS BS, I'll save $20K in taxes.

I have no earthly idea what he said, other than "lease it" from a business standpoint. On a personal level I don't know, ask YOUR accountant.

 

Ok, can someone explain to me how you can deduct an ENTIRE lease payment of a ferrari, which it seems most of you are doing???

My accountant said its not difficult to do, if you want to deduct a pick-up truck or some other work-type vehicle. But doing a ferrari would almost certainly trigger an audit.

How does a ferrari become one's "work vehicle." The IRS would certainly see that as a pleasure vehicle. How do folks do that?!?

I have a medical practice and do some realestate development, and my accountant doesn't think its a good idea to lease through either business, unless I claim something like 10% business use, 90% personal. How do you guys do it???

I suppose I can always put a hitch on my 996 and haul gravel....

 

This is my understanding BPU.
If you lease a car under your PA or Corp or however you are structured.
The issue as to whether it can be written off 100% relates to whether it is used 100% for business use.
Since the IRS does not allow distance between the home and office to be deducted, it does not seem you could deduct it 100%. They will allow the distance from the first office to the second office or from your out patient office to the hospital to be deducted. If you manage to log 80 to 90% of your mileage between the two office locations, then you can deduct that % off as business use. That would include the same % relating to all service and expenses associated with the car.
With it being a lease, it could very well show up as a line item lease equipment on your taxes which might raise less eyebrows that an actual loan on the books listed as a 200K car.
I must qualify this in saying that I am not a tax accountant and rely on my accounants for advice. I am like you, I am a helth care provider.
I think the most qualified to answer this on this board haas got to be Dr. Tax, which I recalll reading used to be an IRS agent or something and is now a tax attorney or something like that.
Good luck

 

Gary, thats about how I figured it, but I still don't understand it.

Seems many folks lease 2-3 cars, and deduct all of them. Its like saying you own 5 cars, and use one each day at work, and then saying all are 100% for business use...I just don't see how that doesn't get audited.

I would love to say my nice reliable honda is my pleasure vehicle, while my porsche/ferrari/etc is my business vehicle, but who in their right mind believes that. I wouldnt want to leave an exotic car parked outside anywhere, much less outside of my office (decline one narcotic seeking patient and you would be looking for a good paintshop).

I would assume that the IRS was brighter than that...

 

I guess the business aspect depends on your situation.

Hospital one: 3 miles from my house-commute. Hospital two: 45 miles from number one- 90 miles between work locations every day. Toss in 10% personal use makes it 80% business use. That's also a nice number (70-80%)that doesn't raise red flags.

If you have a home office, that too can be used to avoid "commuting." The bottom line is some accountants like to walk the line and some don't.

My personal cars F-car, etc are purchased. I also have a "farm" and am deducting/depreciating my King Ranch pick-up.

Later this year, I plan on leasing an AM Vanquish and rolling in any loss (into that lease) when I trade in my S 55-another benefit of leasing.

Once again, talk to YOUR accountant!

 

I am a long-time reader, but first time poster, and thought I could add to this discussion. I have an excel file that I put together a couple of years ago to try to quantify the issue of lease vs finance vs buy. Pretty much, you just fill in the cells with blue font and yellow background and at the bottom of the file it calculates what is the best route to go with. The three bold font lines at the bottom show how much you would save vs. leasing if the numbers are positive and how much more you will spend by leasing if the numbers are negative. The bottom of the file calulcates three scenarios for the comparison based on 3 estimates of what the car is worth at the end of the term.

I hope this helps people... Hopefully it is my way of paying back this board for all that I have gained from it. Let me know if anyone has any questions or disagrees with the methodology.