Buying vs leasing

champagne612 · 12-29-2011, 05:39 AM

I recently visited a dealer and became aware of the lease advantages vs paying cash.

In Missouri you pay the tax on the monthly lease amount vs the entire sale price.

Putting down 10 - 20 percent and having a balloon payment at the end.

I ran the numbers and there is a savings - calling the accountant today.

Lease deductions appear to be more valuable vs a cash buy.

Thoughts?

Barry · 12-29-2011, 11:39 AM

Last few years I've bought everything (cars, bikes, campervans,etc) for cash. Think it's a prudent reaction to the Irish recession, and the all but closure of credit lines in the Irish banks. Even though it might not be applicable to me I'd like to see the Maths behind this.

wetpet · 12-29-2011, 12:22 PM

you can also borrow the money from your house and deduct the interest.

redtrman · 12-29-2011, 01:16 PM

Quote:

Originally Posted by wetpet

you can also borrow the money from your house and deduct the interest.

Not always, AMT adjustments!

champagne612 · 12-29-2011, 02:27 PM

Quote:

Originally Posted by wetpet

you can also borrow the money from your house and deduct the interest.

True ... and it's probably the highest tax deduction - but there is one problem.

If you take out a loan they reappraise your home.

That appraisal is then public information - which can raise you property taxes.

Property values have gone down for the most part but the cities have just raised their tax rate to compensate - which has most properties paying more in taxes even with a lower value.

champagne612 · 12-29-2011, 02:47 PM

Quote:

Originally Posted by Barry

Last few years I've bought everything (cars, bikes, campervans,etc) for cash. Think it's a prudent reaction to the Irish recession, and the all but closure of credit lines in the Irish banks. Even though it might not be applicable to me I'd like to see the Maths behind this.

Math is simple

200,000 car 8% tax = 16,000

200,000 personal property 3% = 6,000

Total 22,000

Lease 8% tax 2000 = 160 per month

Personal Property is zero.

After that all the other numbers are a wash - interest vs deduction.

Fun Facts but on a morbid note - if you are dying and can't get life insurance a lease or car purchase with a loan has a very cheap insurance policy that has to be issued at time of lease or purchase.

GuyIncognito · 12-29-2011, 03:05 PM

I've only leased one car, a 2002 VW...nice car until it fell apart. but never mind that.

I paid property tax...it was added to the bill by VW Credit at the end of the year as a separate line item ($300 or so).

I think there was a use tax of some sort as well, but don't recall.

at any rate, it can make sense to lease, especially if it's a business expense.

henryr · 12-29-2011, 04:19 PM

WTF is the personal property tax of 3% ? that's yearly ?

champagne612 · 12-29-2011, 04:32 PM

Quote:

Originally Posted by henryr

WTF is the personal property tax of 3% ? that's yearly ?

Welcome to the show me state

We have all sorts of specials ... if you live in the city or derive an income in the city you also get to pay a 1% earnings tax.

I pay personal property tax on computers office equipment and machinery.

Once you list it - the item never goes away but it does depreciate.

Flip side is the State of Missouri is one of the few states with almost no debt.

henryr · 12-30-2011, 05:12 AM

so you buy a used $200k 599. your paying sales tax AND $6k in property taxes... ? damn.

what the depreciation schedule like ? 27.5 (

)

screw that

champagne612 · 12-30-2011, 05:18 AM

Quote:

Originally Posted by henryr

so you buy a used $200k 599. your paying sales tax AND $6k in property taxes... ? damn.

what the depreciation schedule like ? 27.5 (

)

screw that

They go straight to blue book - but you nailed it.

Another idea - is setting up a LLC in Alaska and you get out of both.

Magnum6464 · 12-30-2011, 05:23 AM

Quote:

Originally Posted by champagne612

Math is simple

200,000 car 8% tax = 16,000

Holy crap 8% tax thats it? No wonder you guys have all the toys......then we get hit with income tax....53% crap...well in Quebexico anyways.

~

Mario

champagne612 · 12-30-2011, 05:25 AM

Quote:

Originally Posted by Magnum6464

Holy crap 8% tax thats it? No wonder you guys have all the toys......then we get hit with income tax....53% crap...well in Quebexico anyways.

~

Mario

It's actually 8.17

Kurby69 · 12-30-2011, 05:43 AM

Quote:

Originally Posted by champagne612

It's actually 8.17

I miss Florida already. No state sales tax is a great thing and I am starting to regret moving to Missouri.

Boxer · 12-30-2011, 05:59 AM

Quote:

Originally Posted by Barry

Last few years I've bought everything (cars, bikes, campervans,etc) for cash. Think it's a prudent reaction to the Irish recession, and the all but closure of credit lines in the Irish banks. Even though it might not be applicable to me I'd like to see the Maths behind this.

+1, I buy everything with cash. I just tend to personally be very debt adverse.

212Export · 12-30-2011, 07:16 AM

Quote:

Originally Posted by Boxer

+1, I buy everything with cash. I just tend to personally be very debt adverse.

+1 again. So do I 100%.
I'm simply to stupid to get along all problem solvings in case one or more of these factors/variations (politician change of thinking, economy, or other radical change of measures of the state) suddenly change to still get a balanced ho-o-o-o-ld on my initial idea/mental construct.

henryr · 12-30-2011, 07:20 AM

i used to buy everything with cash.... current meltdown has taught me you are better off as a dead beat debtor when shit blows up....

GuyIncognito · 12-30-2011, 07:22 AM

Quote:

Originally Posted by henryr

i used to buy everything with cash.... current meltdown has taught me you are better off as a dead beat debtor when shit blows up....

ain't that the truth

champagne612 · 12-31-2011, 04:59 AM

Quote:

Originally Posted by henryr

i used to buy everything with cash.... current meltdown has taught me you are better off as a dead beat debtor when shit blows up....

That's funny and also correct.

I don't think there is a right or wrong method to the madness of buying depreciating assets.

champagne612 · 12-31-2011, 05:26 AM

Quote:

Originally Posted by 212Export

+1 again. So do I 100%.
I'm simply to stupid to get along all problem solvings in case one or more of these factors/variations (politician change of thinking, economy, or other radical change of measures of the state) suddenly change to still get a balanced ho-o-o-o-ld on my initial idea/mental construct.

I try not to go there - but find myself giving pause to "what if".

If you ever feel comfortable to post a thread - sure would be fun to brainstorm a proper preparation.

12-29-2011, 05:39 AM	#1
champagne612 Owner Elite Member Join Date: Sep 2010 Location: St Louis Ferrari Life Posts: 4,622 Name: Doug	Buying vs leasing I recently visited a dealer and became aware of the lease advantages vs paying cash. In Missouri you pay the tax on the monthly lease amount vs the entire sale price. Putting down 10 - 20 percent and having a balloon payment at the end. I ran the numbers and there is a savings - calling the accountant today. Lease deductions appear to be more valuable vs a cash buy. Thoughts?

12-29-2011, 11:39 AM	#2
Barry Owner Elite Member Join Date: Jun 2009 Location: Europe Ferrari Life Posts: 3,255	Last few years I've bought everything (cars, bikes, campervans,etc) for cash. Think it's a prudent reaction to the Irish recession, and the all but closure of credit lines in the Irish banks. Even though it might not be applicable to me I'd like to see the Maths behind this. Barry Ferrari's: 360 Modena F1, 308 GT4 Other Italians: Ducati 916, Ducati 848 DD's: RR Sport, BMW 645ci, BMW 1200GS Adv.

12-29-2011, 12:22 PM	#3
wetpet Owner Elite Member Join Date: Jan 2006 Location: Chevy Chase, Md Ferrari Life Posts: 6,599 Name: Ed	you can also borrow the money from your house and deduct the interest. Everything you know is wrong Stop chatting and start living the ferrarilife!

12-30-2011, 05:12 AM	#10
henryr Owner Elite Member Join Date: Aug 2011 Location: Atlanta, USA Ferrari Life Posts: 52 Name: HenryR	so you buy a used $200k 599. your paying sales tax AND $6k in property taxes... ? damn. what the depreciation schedule like ? 27.5 () screw that

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12-29-2011, 03:05 PM	#7
GuyIncognito Elite Member Join Date: Aug 2011 Location: SMO Ferrari Life Posts: 1,109 Name: Chas	I've only leased one car, a 2002 VW...nice car until it fell apart. but never mind that. I paid property tax...it was added to the bill by VW Credit at the end of the year as a separate line item ($300 or so). I think there was a use tax of some sort as well, but don't recall. at any rate, it can make sense to lease, especially if it's a business expense.

12-29-2011, 04:19 PM	#8
henryr Owner Elite Member Join Date: Aug 2011 Location: Atlanta, USA Ferrari Life Posts: 52 Name: HenryR	WTF is the personal property tax of 3% ? that's yearly ?

12-30-2011, 07:20 AM	#17
henryr Owner Elite Member Join Date: Aug 2011 Location: Atlanta, USA Ferrari Life Posts: 52 Name: HenryR	i used to buy everything with cash.... current meltdown has taught me you are better off as a dead beat debtor when shit blows up....