Automotive

Tax deductions: Lease then buy?

  • Last Updated:
  • Jun 17th, 2021 11:16 pm
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[OP]
Member
Oct 19, 2013
373 posts
61 upvotes

Tax deductions: Lease then buy?

I got a new role at work where I will need to frequently travel with my own vehicle when things are safe again. Employer will sign a T2200 for the tax year.

I'm planning to purchase a vehicle over $30K (limit for CCA). Does it make sense to lease first, then buy the car to maximize the amount I can deduct? I understand I will need to pay for the admin fee to buy back the car after the lease. I was thinking I could deduct lease payments for the 3y term and then CCA the remaining value after.

I've been looking at EVs as well since I can CCA up to 55K (at 100%) but I'll likely be only driving 15K a year total so hard to financially justify an EV.

Looking for a compact SUV to carry bulky items in the trunk easily.
7 replies
Sr. Member
Sep 25, 2018
853 posts
1574 upvotes
Hard to find a 30k compact SUV these days. For example Toyota RAV4 starts at 28k + PDI + tax.
[OP]
Member
Oct 19, 2013
373 posts
61 upvotes
AlicW93740 wrote: Hard to find a 30k compact SUV these days. For example Toyota RAV4 starts at 28k + PDI + tax.
I'm looking at compact SUVs over 30K hence the question if lease then buy makes sense for tax deductions.
Deal Expert
Jan 15, 2006
16705 posts
15130 upvotes
Richmond Hill
w3ssisback wrote: I'm looking at compact SUVs over 30K hence the question if lease then buy makes sense for tax deductions.
Too many variables. Interest rates and residual values being the main ones.
[OP]
Member
Oct 19, 2013
373 posts
61 upvotes
EP32k2 wrote: Too many variables. Interest rates and residual values being the main ones.
I'm planning to pay cash to buy out after the lease. I'm targeting to lease a vehicle that will have a residual value of $30K or less.
Deal Expert
Jan 15, 2006
16705 posts
15130 upvotes
Richmond Hill
w3ssisback wrote: I'm planning to pay cash to buy out after the lease. I'm targeting to lease a vehicle that will have a residual value of $30K or less.
That doesn't answer my question. What are the lease terms? Figure out what car you actually want and then ask for advice.
[OP]
Member
Oct 19, 2013
373 posts
61 upvotes
EP32k2 wrote: That doesn't answer my question. What are the lease terms? Figure out what car you actually want and then ask for advice.
Interested in the 2021.5 cx5 signature. Msrp $42750.

From the website, if I lease will do a 48 month, $602 (tax included) @2.95%

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