But, unless you can deduct the lease payment, a lease does not look attractive. I realize there is opportunity costs, but investments are NOT guaranteed either. A car like many items we purchase looses value over time, but that is NOT a reason for leasing, AKA renting. Do you rent your furniture? Do you rent your swimming pool? Do you rent your computer? Do you rent your stereo system? Do you rent the TV or TV's in your house? Do you rent your wardrobe? All of the aforementioned are tangible items, which loose value as soon as you have bought them.

 

My accountant informs me there is no tax advantage to leasing. For some irrational reason I just feel better owning my car. I considered leasing the 545 last summer, but the lease rates on the 550 are not so attractive now.

 

US gets 4 years/50k miles.

 

But, unless you can deduct the lease payment, a lease does not look attractive. I realize there is opportunity costs, but investments are NOT guaranteed either. A car like many items we purchase looses value over time, but that is NOT a reason for leasing, AKA renting. Do you rent your furniture? Do you rent your swimming pool? Do you rent your computer? Do you rent your stereo system? Do you rent the TV or TV's in your house? Do you rent your wardrobe? All of the aforementioned are tangible items, which loose value as soon as you have bought them.
[/quote]My very detailed calculations imply that what you say about leases not looking very attractive for ordinary consumers (i.e., those that can't deduct the lease payments) isn't true given a wide variety of assumptions that don't involve significant risk and given the acquisition of a series of cars. But, it is true that installment purchasing may turn out to be better for the consumer in the context of one car because of low or negative returns. As indicated, however, the idea is to come out better off by leasing over a sequence of cars.

Regardless, I doubt that we would be better off leasing many more types of items--even those that we keep for relatively short periods of time and that maintain their values reasonably well. I think much of the reason for not leasing more items, such as furniture, computers, and sound systems, is the lack of opportunity and the related inadequacy of the resale markets for these items. But, please note that I have not really thought through the reasons why we tend to not lease many more types of items--particular high-end models of things such as furniture, computers, and sound systems.

 

No not at all.
If I buy a new $70K car today, trade in a car for $42K, that is on my books for $60K, the $18K difference gets added to the $70K. I don't have to pay this, but as far as my books go, my $70K car is on there for $88K and I'm depreciating from that number, not $70K.

Had I sold that car outright, I would have realized an immediate $18K loss and would now be depreciating my $70K car as is.

Now take the SUV scenario where the car has been fully depreciated. Here I WANT to trade in my car - cause if I do sell it outright, I do recognize the gains - but if I trade it in, I'm free and clear (this may be your point about the IRS being flexible).

 

What part of the country was the 05 545i out of for under $50K, and how much miles was on it? That's too cheap if it had less than 2K mileage.