991RDC

Yes, this was done for tax purposes. You can amortize the 2 year lease to the business and at the end of the lease term you can payoff or finance the $29,997. Nothing shady about this lease, it's thru Porsche Finance and I wanted the best terms available. Porsche offers this program, but you need to ask for it.

991RDC

No, The One Pay is $140,740.40. $29,997 will be the purchase price at the end of the 24 month lease term.

Mech33

Interesting. Why is the artificial residual so low? This must be architected for such up front lease payoff options for business write-off purposes. My "shady" comment was meant in terms of using an incorrect residual to maximize tax benefits. But I understand Porsche standardized those, hence the oddity here in how a 2014 GT3 could be on the books as being worth $30k in 2 years...

kinimod

Thanks, I guess that makes sense in your case for tax reasons: you actually wanted to maximize the one-pay. In my case I want to minimize one-pay because I only want to hold on to the car for 6-12 months. Do you remember if the salesman presented you with the "best" residual? Is it around 60%?

991RDC

I went thru this with my account. Yes, the purpose of this lease was to maximize the write-off as my primary vehicle and to purchase the car at the end of the lease term with out taking a huge tax hit.

WernerE

The $29k residual doesn't make any sense unless you paid capital cost reduction under the standard residual -- I wasn't even aware one could do that (or why you would). I'm curious how many miles did you choose on the lease?

Finally, Porsche's residuals and money factors on this car sucks *****. I'm normally a big fan of leasing but not this time around.

991RDC

Yes, the GT3 lease sucks, but this one works. Miles, 15K per year.
Porsche offers this lease, but you have to ask for it.

991RDC

If you purchase a car you depreciate the cost as follows:

Tax Year Amount
1st Tax Year $11,160
2nd Tax Year $5,100
3rd Tax Year $3,050
Each Succeeding Year $1,875

This what you write off each year no matter if the car costs $15,000 or $150,000. If you lease you deduct the lease payment that you pay in the year less an amount from what the IRS calls a lease inclusion table

Value of Vehicle Year of Lease
100,000 110,000 52 115 170 203 235
110,000 120,000 58 127 189 227 262

As you can see the amount for a $100,000 FMV vehicle lease you would not be able to deduct $52, 115, 170, 203, 235 over 5 years of a lease.

So not sure what someone is referring to saying a purchase and lease is handled the same way. As you can see its two different things.

There is a capital lease we sometimes use on our commercial company trucks where ownership at the end of the lease reverts to you for a bargain purchase of usually $1. If you have a capital lease you treat the lease as a purchase. The real capital lease is usually with equipment and commercial vehicles.

WernerE

Keep in mind that your annual lease payment deduction is reduced for personal miles (including commuting from home to work).

Interesting line of work that one can drive a GT3 for business.

I'm still surprised at the low $29k residual at the end of 24 months, even with the 15,000 annual miles. If you exercise the buyout at maturity and resell the vehicle, the gain will come back to take medium bite out of your tax strategy. The time value of money isn't much, at least currently.

Finally, the costs of leasing this car are not insignificant. The money factor on a 24 month lease is not competitive on this car, which approximate $20k in finance costs, acquisition and termination fees.

Sloopy

With purchase you have limited deduction against earned income. With the lease you can write off any amount that is deemed reasonable up to the entire lease payment. If in 30% tax bracket you are saving substantial amount.

Yes cost is higher for finance so this would be on a per person bases.

TAch Miami

Reasonable is the key word. Since commuting and personal use is disallowed, the OP better not have an office job and be a pizza delivery man.

doubleurx

There are ways around this. You can state a different vehicle is used for commuting, but in general, writing off 100% of the vehicle cost will result in an IRS red flag, especially on an expensive car.

Shrevehorn

Spent a lot of time reading most of this thread. I'm a CPA with auto dealer clients, leasing companies, etc. I see a lot of accurate info here, but also some comments from folks that are confused. This is a complex area.

Bottom line, if you have business use (legit), you must lease to get an bang for the buck, so to speak. Now proving up a high % of business use is going to take some good facts and good documentation. But it is possible.