[Moewron]

Something to keep in mind is the global supply chain goofiness and COVID- I don't think that extrapolating car value performance over the past half-decade to future performance is as straightforward as it might have been. There was a HUGE demand for used vehicles during COVID as a result of new vehicle shortages that are not likely to manifest this time around.

[Crazy1323]

Originally Posted by Hammer110!

You make a lot of great salient points. For those that are self employed perhaps the biggest advantage is the tax advantage when running the vehicle through the business. Fully 100% of business use of the vehicle is deductible. I currently write about 75-80% of my lease costs off as a business expense.

Disclaimer: This is not tax advice, consult your tax advisor

The rules under IRC 280F cover depreciation limitations on luxury automobiles. If a vehicle has a gross vehicle weight rating of 6,000 pounds or more, then those rules don’t apply. The G90/G99 M5 has a GVWR of about 6,400 so purchasing may be more tax beneficial than leasing. If a vehicle were purchased in 2025 and used 100% for business then you could take a tax deduction of a little over 50% of the vehicle in year one, with the remainder of the price deducted over the next 5 years.

Additionally, vehicles used in a trade or business may be eligible for a $7,500 tax credit. There are no restrictions on MSRP, country of origin, etc. for the credit on commercial vehicles like there is on personal use vehicles. This credit would not be available for the business if the vehicle was leased.

So, if this is going to be a “business vehicle” you may be better purchasing rather than leasing from a tax standpoint.

[subterFUSE]

For businesses that lease cars, you are allowed to deduct the fair use percentage of the lease payments for business use. i.e. if you use the car 90% for business, then you can deduct 90% of the lease payments. And those lease payments would be made using pre-tax dollars, so you are saving your effective tax rate vs. paying for it personally.

[Crazy1323]

Originally Posted by subterFUSE

For businesses that lease cars, you are allowed to deduct the fair use percentage of the lease payments for business use. i.e. if you use the car 90% for business, then you can deduct 90% of the lease payments. And those lease payments would be made using pre-tax dollars, so you are saving your effective tax rate vs. paying for it personally.

This philosophy applies to a business purchasing a vehicle too (even when financed). You can deduct business use component of the expense associated with the vehicle, including depreciation. So if a business purchases a $100k car and uses it 90% for business, then that business will get a pre-tax deduction of $90k.

[subterFUSE]

Originally Posted by Crazy1323

This philosophy applies to a business purchasing a vehicle too (even when financed). You can deduct business use component of the expense associated with the vehicle, including depreciation. So if a business purchases a $100k car and uses it 90% for business, then that business will get a pre-tax deduction of $90k.

It's not quite that simple with purchasing.

First question is whether or not the vehicle qualifies for Section 179. Sec. 179 is the "large truck or SUV" provision, with 6000 lb gross weight minimum.

If you can't use Sec 179, then the vehicle must be depreciated over several years according to the depreciation schedule.

If Sec. 179 does apply, then you are able to deduct up to $30,500 in the year of purchase. To deduct more you must use bonus depreciation, which also has rules. I believe under 2024 rules you can calculate bonus depreciation on 60% of the remainder.

So, assuming 90% business use like you mentioned above, then a $140k vehicle would get to to deduct the following in year 1:

30,500 * .9 = 27,450 Sec 179 deduction

140,000 - 27,450 = 112,550 remainder

60% of 112,550 = 65,530 bonus depreciation

27,450 + 65,530 = $96,200 deduction in year 1


So on a $140k car, 90% business use, you could deduct 96,200 in year one, and the rest of the value will then be depreciated over the following years.


A 100K car in your example above would be considerably less than 90K deduction in year 1. It's still a great deal if you qualify, but it's not a simple 90% of the total price deduction.


I'm not sure if the M5 would qualify for Sec 179 over 6000 lb "SUV" provision, though. Seems like a gray area.

[DocWeatherington]

Originally Posted by Crazy1323

I’ll probably do a single pay lease on mine. Too much uncertainty about future value.

Never fo a single pay lease...

If you wreak the car 20mins later you don't get any of what your paid back. Bmw owns the car not you, the check from your insurance goes to bmw directly and they are not required to give you any equity. Just as you are required to pay negative equity.

DO NOT do a single lease payment

[DocWeatherington]

Originally Posted by Alan l.

Unless BMW starts whoring out the allocations I do not expect the M5 sedan and especially the Touring to drop in value faster than prior generation M5's. Considering it seems like BMW dialed back the X5M and X6M builds as of late this further indicates they won't just flood the market with these cars.

It's also the market... last gen was cheaper to lease, buy, and own. The world wide economy was better and folks had more cash. As things tighten luxury good purchases drop.

Plus manufacturers learned alot during covid about having a shit ton of inventory with the need to do excessive incentives and give cars away. EVs are also in the same boat...throttle back to meet market demands and not have a ton of inventory on lots.