Is it more cost advantageous to lease or buy a car as a real estate agent? From what I understand, you can write-off the cost of the lease whereas with a purchased car, you can only deduct mileage off what is used for professional purposes.

Unless you drive less than 15,000 miles per year, leasing is usually a non-starter.

I drive nearly 45,000 miles per year so leasing would never make economic sense for me.

But some people have a car just to look at it, and usually walk or take the subway . . . . we need people like that. I'm not one of them; nor are most people in Real Estate.

haha, no I'm not looking to lease a car so I can lean on it. I didn't realize mileage would add to the costs - I figured it was a flat rate. Tax deductions with mileage seems like it can be a headache as well.

Thank you for the answer.

-Bill

Hi Bill,

With the current low interest rates, you are much better off buying. You can probably get zero percent interest.

I don't know what the usual and customary programs are elsewhere, but I just looked at what it would cost me to lease a new Honda Accord EX-L for 48 months with my 45,000 miles per year.

The program is:

Monthly Lease Payment is $418.00 per month;
Duration = 48 months, 12,000 miles per year cap;
LEV (Lease End Value) = $19,961;
Excess Mileage costs 20¢ per mile at Lease End;
I pay Sales Tax; the Title; and Registration Fees;
$0 Security Deposit;
$0 due at Lease Inception.

So if I drive my 45,000 miles per year, then after 4 years I will have tallied 180,000; so I'll owe them an additional (132,000 X 20¢) $26,400. (or an additional $550 per month) which brings my total monthly automobile expense to the Princely Sum of $968.00, and the car goes back where it came from.

I guess, if provided the straight-forward option to buy out the Lease at the end for the $19,961 LEV instead of paying the Excess Mileage Fee, then I'd probably do that . . . . but will that car really be worth $19,961 when it is 4 years old and has 180,000 miles on it ??? (I think more like about $8000?) So that would reduce my true monthly expense down to a mere $667 and I now own the old car. (I'd better be liking it).

You might be able to get a dealer to structure a Lease to your specific driving pattern ?


Not really much different. The real question is whether you elect to take the fairly generous IRS mileage deduction which was 50¢ per mile in 2010 OR attempt to keep track of all of your Leasing (or purchase/ownership expenses, including depreciation), maintenance, gasoline, oil changes, car washes, et cetera, and then determine how much was business related.

I just keep track of my business mileage and take the deduction . . . . actually, it's easier for me to keep track of my few personal miles and what's left over was all Business.

Leasing doesn't eliminate the need to keep track of your mileage . . . . and it MUST be in writing.