If you’re in the market for a new car, you may be deciding if buying or leasing is your best option. While different experts have different opinions on the matter, Grant Cardone — a private equity fund manager and real estate investor — has one hard-and-fast rule he follows.
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Here’s how Cardone decides which cars he buys and which cars he leases.
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Grant Cardone’s Golden Rule: Only Buy If You Can Write It Off
In a recent Instagram post, Cardone said that you should lease your car unless you can get a tax write-off for your car purchase: “There’s only one car you buy, and the rest you lease,” he said.
According to the IRS Section 179 tax depreciation rule, you can write off the cost of a car weighing more than 6,000 pounds, as long as you use it more than 50% of the time for business purposes. For example, if you buy a $150,000 Range Rover, you can write it off for the tax year you make the purchase during because it weighs 6,000 pounds.
“You could buy it on Dec. 31, write it off that year — even though you didn’t even drive the car,” Cardone said. “You get to write it off … against your earned income if you have self-employment money or an LLC producing income.”
If possible, Cardone said to pay cash for the car you are buying.
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Why Cardone Only Leases Cars for 24 Months
Cardone has a second vehicle that he leases, and while he is a supporter of leasing a car, he noted that you should only do so if you can afford it with a shorter lease term.
“The [Rolls-Royce] Cullinan that I have is a leased vehicle,” he said. “I leased it with no money, I put it on a 24-month lease — never longer than that. Whatever the payment is, if you can’t handle that payment, don’t do it. And then every 24 months, I trade that car in.”
It’s important to note with leasing that many experts are opposed to it because at the end of the lease, you don’t have a car that you keep — you’ll need to start making new payments on another car.
Can You Still Get the Tax Break If You’re Not a Business Owner?
The IRS only allows you to deduct the cost of a vehicle if it’s a business expense, so you must be self-employed or a business owner to get this write-off. Cardone previously told GOBankingRates that it could be worth it to become a business owner for this tax break alone.
“I would always be a business owner in some way, shape or form,” he said. “If I didn’t own a business, I would join a multilevel marketing company so that I had a business. For $49, you can join a multilevel marketing company to write off the car.”
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This article originally appeared on GOBankingRates.com: Grant Cardone Reveals the Only Time You Should Buy a Car — and When To Lease
