Question about financing a Tesla for small business owner

Question about financing a Tesla for small business owner

I'm considering a Tesla S. I own my own small business, and I'm evaluating the business lease and finance repurchase options. I searched the forums and came across this:

In my business I payed for my Tesla personally and took the Tax credit. My business then reimburses monthly for a car allowance that is proportional to the lease value of the car.
I get the best of both worlds. I own the car personally and I get the tax credit and I get reimbursed for the monthly payment with pre-tax dollars. The amount you can get reimbursed is set by an IRS table that is proportional to the value of the car.

This does indeed seem like the best of both worlds. According to page 25 of IRS publication 15B, a car with fair market value of $100k would have an annual lease value of $12,437.50 if 50 percent of my use of the car is business. The annual lease values are based on a 4-year term, and according to the publication, "these values will generally stay the same for the period that begins with the first date you use this rule for the automobile and ends on December 31 of the fourth full calendar year following that date."

This means I can purchase the Model S, and then reimburse myself $1,036 per month for the first 3 years. At the end of that 3 years, I can sell the car back to Tesla for about the same that I owe on the loan (~$47k).

The loan payment would be about $1,400/mo for 72 months at 2.74% interest rate. With this arrangement I'd be paying $1,036/mo of that with pre-tax income, and $364/mo of it with after-tax income.

Am I getting this right?


Uncle Paul | 9 maggio 2016

In addition, if purchased, your company can write off the first $25,000 of the car in the first year, and accellerate the balance more quickly than for normal cars. It is the Section 179 SUV deduction for vehicles with a gross vehicle weight over 6,000 lbs. Model X Qualifies.

This is addition to the Tax credit you will get for buying the car. Leasing might be different, as the leasing company usually takes the tax credit.

switters | 9 maggio 2016

Thanks phawker1. I did hear about the Section 179 truck deduction, but unfortunately for me I'm not particularly interested in the Model X form factor. I wish the Model S qualified for that!

black_w34 | 25 febbraio 2020

Is this proposal still available? If it is, I would like to know more details about your business. I have some experience in the financial market and this offer seems interesting to me. However, I agree that it is risky, because I don’t know you. In my past, I have a bad experience with a partner of mine, who tried to steal my business, but due to the insurance I had , he couldn’t destroy my company. That’s why for me is very important to know who am I dealing with. Waiting for more information about you.