Sell my car and lease a Truck for the writeoffs?

Sell my car and lease a Truck for the writeoffs?

Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes

I have 20+ units now and interested in doing more BRRR and Flip projects in the near future after achieving FIRE in another year or two.

For this, I want to get a truck for renovation/landscaping/demo/home depot trips. Nothing too crazy, but maybe a Tacoma for around $30k or so. Would it make sense for me to sell my $15K Acura that I own free and clear to get a LEASE on a truck in order to be able to expense and write off some of the lease fee’s (obviously I would have to track mileage and I’m anticipating it would be approximately 65% business use and 35% personal use).

I've always been of te school of thought that it makes more sense for me personally to buy vehicles that are 3-5 years old to get a great price after the initial depreciation in value and then hold on to that car for years to drive it into the ground to get the most value out of it until repairs start getting too high and then do the same thing.....but now that My Rental LLC is scaling up to more and more units it might make more sense to be able to write off the lease expense (at least a portion of it) and go a different direction???

Thoughts??

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Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
7y

@Mark Hughes

My issue is the lease mileage constraint. I can avg. 25k a year depending on property locations etc. However, my wife leases her Caddy's through her S-corp and she barely does 7500/yr. Thankfully Kohl's is barely 2 miles away.

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  • Rental Property Investor · Birmingham, MI · Member since 2016 · 60 posts · 71 votes
    7y
    @Mark Hughes I go the lease route because of write offs and maintenance costs. It makes more sense in my case. I will point out though that the company owns my "personal" vehicle similar to what you described. It's definitely more arithmetic at tax time because you have to decide on mileage rates or actual expenses.
  • Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    7y

    What's the difference between write offs for a leased car and paid off car if you use mileage anyway?

    If you don't sell your Acura, then you can write off 100% of mileage of the leased truck......otherwise, same miles and $$

  • Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
    7y

    @Irina Belkofer good point but I don’t know that I need another vehicle. The night thing about switching from own to lease would be I could free up cash from car sale to then have that towards the next down payment on another rental property.....while also eliminating some of the repair costs on my Acura that is about 6 years old and might be more repair costly in the next couple years???

  • Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
    7y

    @DOUGLAS CHRISTENSEN thanks for sharing! So just to clarify. Is the leases vehicle actually in your personal name or the Company’s name? Would that make a difference anyways?

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    You can buy a truck (7k GVW or greater) and 179 the whole amount year 1, if you want.

  • Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
    7y

    @Wayne Brooks I will check that out. Thanks for the tip!

  • Rental Property Investor · Birmingham, MI · Member since 2016 · 60 posts · 71 votes
    7y
    @Mark Hughes In the company's name. Namely for insurance reasons because I have tools and materials frequently in the vehicle. Makes sense to pay the extra couple bucks a month for a commercial policy than a rider on a personal auto insurance policy. My agent also told me that if my personal vehicle had a company logo on it that it would be excluded even with a business rider.
  • Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    7y

    I 179 my pickups & SUV's. My mileage is way too high for a lease. However, you can finance a truck & still 179 the entire purchase price.

    https://www.section179.org/section_179_leases/

  • Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
    7y

    @Pat L. Thanks Pat. That is awesome. Can you expand upon your comment about mileage being too high for lease. you can not deduct mileage on a lease, just the lease payments and actual fuel costs???

  • Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    7y

    @Mark Hughes

    My issue is the lease mileage constraint. I can avg. 25k a year depending on property locations etc. However, my wife leases her Caddy's through her S-corp and she barely does 7500/yr. Thankfully Kohl's is barely 2 miles away.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    @Mark Hughes Leases have an annual mileage cap, if you drive a lot of miles the extra fees will kill you.

  • Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
    7y

    @Wayne Brooks okay, That makes sense. Thanks

  • Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
    7y

    @Pat L. Love the Kohl’s comment!! Lol

  • Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    7y

    @Mark Hughes I told the kids I want my ashes spread on the parking lot of Kohl's. That way I know my wife will visit me 2-3 times a week.

  • Member since 2018 · 161 posts · 152 votes
    7y
    Why not just keep the car and buy a beater truck? It's going to become a beater anyway. I'm not much for debt though. Your renters with fancy cars are renters because they have fancy car payments.
  • Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
    7y

    @Angela Smith. That’s a consideration too! But part of my motivation is to buy a 4wd truck w crew cab as I have a family of 3 and dog so when we road trip up to the mountains we need a reliable 4wd car that handles in the snow and is comfortable for the fam and car seat etc....

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