[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 NOT 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.

[Crazy1323]

Originally Posted by DocWeatherington

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

Good advice! I guess I will lease and just setup automatic payments!

[mjr24]

Originally Posted by DocWeatherington

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.

Man, I miss those $1250/month lease payments on a 24 month lease with my F90, LOL......

Those probably aren't coming back.

[DocWeatherington]

Originally Posted by mjr24

Man, I miss those $1250/month lease payments on a 24 month lease with my F90, LOL......

Those probably aren't coming back.

Nope long gone like a gallon of gas for 1 dollar or a real burger King whopper lol

[StitChES37]

Originally Posted by DocWeatherington

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 NOT required to pay negative equity.

DO NOT do a single lease payment

On a similar note - how do folks handle trading in a vehicle at the dealership? This reduces the cap cost, and therefore taxes you pay, but if you then lease the car you've effectively given them a large down payment, right? So if the car is then totaled you've still lost that equity? In which case, is it just balancing the amount you save in taxes vs risk of losing the equity if totaled?

[DocWeatherington]

Originally Posted by StitChES37

On a similar note - how do folks handle trading in a vehicle at the dealership? This reduces the cap cost, and therefore taxes you pay, but if you then lease the car you've effectively given them a large down payment, right? So if the car is then totaled you've still lost that equity? In which case, is it just balancing the amount you save in taxes vs risk of losing the equity if totaled?

In concept on a trade, aim for the best deal possible. You maybe better off selling it private party, or to another different dealership as tax savings could be moot in different states.

On the equity front on the trade I would take all that back and not use it as a down payment unless

1) you are required to pay all sales tax up front vs monthly on the payment
2) you have fees and typically do a zero drive off and can just pay those fees upfront and save the interest long term as they get it one way or another. But net the same situation would apply if you total the car out or it's stolen you don't get any of those fees back.

You may want to math out the payment to see if your just better off investing it.

Option 3) you could do MSD, but again the reduction in payment vs what you could make investmenting is higher. But you get your MSD back so it's not a loss.


The equity of the trade in amount on the vehicle lies with BMW FS as they own it and your just a renter. If they want to give it too you they can, but aren't required to do so as you agreed to it and to making payments until the debt is paid.

[subterFUSE]

Originally Posted by StitChES37

On a similar note - how do folks handle trading in a vehicle at the dealership? This reduces the cap cost, and therefore taxes you pay, but if you then lease the car you've effectively given them a large down payment, right? So if the car is then totaled you've still lost that equity? In which case, is it just balancing the amount you save in taxes vs risk of losing the equity if totaled?

No sales tax on cars where I live. It's not an issue.


If you can sell the car yourself as a private party, you should be able to get a better value than a dealer will trade. But it takes work and possibly some patience, and don't forget some added risk. I have heard horror stories of private party car sales going bad. Checks that bounce, wires that get rejected by the bank, etc... If I needed to sell a high end car I think I would use a broker of some kind. Someone to be an escrow agent for the deal.

When I leased my F90, I ended up just selling my old car to Carmax. They actually gave me a fairly reasonable offer right off the bat, and the process took minutes. Check in hand, out the door in less than an hour. I recommend at least going to them and getting an appraisal. It gives you a baseline before going to your dealer, if nothing else.

You are correct, that trading in a car for a lease is effectively like prepaying your lease. If you get in a wreck you will lose that money. So from that perspective it's usually better disposing of the old car outside of your lease deal.

[IncurveWheels]

Originally Posted by mjr24

Man, I miss those $1250/month lease payments on a 24 month lease with my F90, LOL......

Those probably aren't coming back.

haha! Same here! I was paying $1190/month tax in on my f90 - I cry now when I see these lease rates!

[masd79]

How does the bmw select work?

[masd79]

Originally Posted by IncurveWheels

haha! Same here! I was paying $1190/month tax in on my f90 - I cry now when I see these lease rates!

$2190 is the new $1190 😂

[ctelimad]

Originally Posted by masd79

$2190 is the new $1190 😂

It is crazy that everything doubled since 3 years
My wife x5 was 660 a month now paying 1160 a month
I was paying 1200 for my previous m8 convertible now paying 2200 for new m5
Not talking about insurances that also doubled

[masd79]

Originally Posted by ctelimad

It is crazy that everything doubled since 3 years
My wife x5 was 660 a month now paying 1160 a month
I was paying 1200 for my previous m8 convertible now paying 2200 for new m5
Not talking about insurances that also doubled

Yes absolutely crazy and the worst part is these cars seem to be depreciating more too, double whammy.

[julienjj]

BMW Canada finances has set the residual value at 42% for a 4 year lease.

This is way less than the manual G80 at 48% (the we're stuck with it rate)
The g80 awd is at 51%

All for 20,000km per year (13K miles)

[DocWeatherington]

Originally Posted by julienjj

BMW Canada finances has set the residual value at 42% for a 4 year lease.

This is way less than the manual G80 at 48% (the we're stuck with it rate)
The g80 awd is at 51%

All for 20,000km per year (13K miles)

Don't lease for 4 years, 36/12 let alone 36/7.5 should be cheaper with better residual.

How much in Canada do they charge per km over lease contract?

[subterFUSE]

Originally Posted by ctelimad

It is crazy that everything doubled since 3 years

Well, we had double-digit real inflation rates for most of that time. The dollar is worth about half what it was before then, so it makes sense.

[Moewron]

Originally Posted by subterFUSE

Well, we had double-digit real inflation rates for most of that time. The dollar is worth about half what it was before then, so it makes sense.

Or, you know, if you actually look it up: 16.5% since 2021

https://www.usinflationcalculator.com/