How I Paid Just $48,650 for a Porsche Cayenne

Porsche is famous for building high-performance sports cars and ultra-luxury SUVs, often tagged with starting MSRPs soaring well into the six figures. It’s not a practical car by any means. So, why did I end up buying a brand new 2024 Porsche Cayenne for $120,000, and how in the world did I manage to slash 50% off the sticker price?

While Porsche may not provide much of a discount (if they give any at all), I took advantage of tax savings from being a business owner to score a fantastic deal on the Cayenne. What if you don’t own a business? No worries – I’ll show you how to save money when buying a Porsche (or other cars) without owning one.

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As a personal finance geek and pragmatic person in general, purchasing a depreciating asset like a car is a bit painful. Many “experts” suggest that buying a used car is the best option because you save thousands of dollars that would otherwise be lost as soon as you drive it off the dealership lot.

While I believe buying used can be a good option, it’s not always the best one. For instance, in 2006, I purchased a new Acura TSX for approximately $30,000 and bet that the cost would be the same as buying a used car if I held onto it long enough.

Well, I underestimated what “long enough” meant because, 18 years and 300,000 miles later, the Acura is still going strong. It’s been proven to be super reliable with regular maintenance.

Over 18 years, the $30,000 breaks down to just $1,667 per year of ownership. That would be extremely difficult to achieve with a used car, especially when you don’t know how the previous owner(s) maintained it.

Nevertheless, after nearly two decades, it needed more frequent repairs, and its body was starting to rust, marking the beginning of my new car buying journey.

Saving Money on a Business Vehicle

Let me state up front that I didn’t plan to buy a Porsche Cayenne when I started to look for a new car. I wanted a small SUV like the Acura RDX, so it’s amusing that my goal to optimize taxes for the year eventually led me to it.

Before I get into all that, people need to know as a business owner, there are two basic requirements you need to pass to be eligible for tax savings:

  1. The vehicle needs to be used at least 50% of the time for business-related purposes.
  2. The vehicles must be acquired and put into business use the same calendar year before December 31.

If you passed that initial test, then here are three sections of the tax code that could save you big money.

Section 179 Deduction

Section 179 of the tax code allows businesses to depreciate a vehicle over the course of 5 years, with the first year limit of $12,200 for vehicles that weight less than 6,000 lbs. Vehicles that weigh at least 6,000 lbs. but no more than 14,000 lbs. are classified as “heavy” and have a much higher first year deduction limit of $28,900.

The higher deduction limit for heavy vehicles is the main reason why SUVs are so popular for businesses. Dealerships enjoy a lift in sales in November/December as businesses make last-minute purchases before the end of the year to reduce their tax liability.

If I had used Section 179 instead of “Bonus Depreciation” that you’ll learn about next, I would have saved $10,693 ($28,900 * .37) in taxes the first year (my business is an LLC pass-through, so I’m taxed at my marginal tax rate of 37%).

Note that the weight is measured as Gross Vehicle Weight Rating (GVWR) pounds, which is the maximum loaded weight of your vehicle with people and cargo as determined by the manufacturer.

The 6,000 lbs. requirement was one of the reasons why I switched my search to heavier SUVs like the Porsche Cayenne (6,250 lbs.) vs the Acura RDX (5,027 lbs.).

Here’s a list of other vehicles I researched that weigh 6,000 lbs. or more:

MakeModelGVWR (lbs)
AudiQ76,900
SQ76,900
Q86,900
SQ86,900
BMWX5 xDrive45e7,165
X6 M50i6,063
X7 xDrive40i7,143
X7 M50i7,143
X7 M50d7,143
BentleyBentayga7,275
Bentayga Hybrid7,165
Bentayga Speed7,275
Flying Spur6,724
Flying Spur V86,724
Flying Spur W126,724
Mulsanne6,173
Mulsanne Speed6,173
Mulsanne Extended6,617
BuickEnclave Avenir AWD6,160
Enclave Avenir FWD6,055
Enclave Essence AWD6,160
Enclave Essence FWD6,055
CadillacEscalade7,100
Escalade ESV7,300
Escalade Platinum7,100
Escalade ESV Platinum7,300
ChevroletSilverado 2500HD10,000
Silverado 3500HD14,000
Silverado 4500HD16,500
Silverado 5500HD19,500
Silverado 6500HD23,500
Express Cargo Van 25008,600
Express Cargo Van 35009,900
Express Passenger Van9,600
Suburban7,800
Tahoe7,400
Traverse6,160
ChryslerPacifica6,055
DodgeDurango6,500
Durango SRT6,500
Durango Citadel6,500
Durango R/T6,500
Durango GT6,500
Durango SXT6,500
Grand Caravan6,055
FordExpedition7,450
Expedition MAX7,700
F-250 Super Duty10,000
F-350 Super Duty14,000
F-450 Super Duty16,500
F-550 Super Duty19,500
Transit Cargo Van T-250 HD9,070
Transit Cargo Van T-350 HD10,360
Transit Passenger Wagon10,360
GMCSierra 2500HD10,000
Sierra 3500HD14,000
Sierra 3500HD Denali14,000
Sierra 4500HD16,500
Sierra 5500HD19,500
Sierra 6500HD22,900
Yukon7,300
Yukon XL7,800
HondaOdyssey6,019
InfinitiQX807,385
JeepGrand Cherokee6,500
Grand Cherokee SRT6,500
Grand Cherokee L6,500
Wrangler Unlimited6,500
Gladiator Rubicon6,250
Land RoverDefender 1107,165
Defender 907,055
Discovery7,165
Discovery Sport6,724
Range Rover7,165
Range Rover Sport7,165
Range Rover Evoque6,724
Range Rover Evoque R-Dynamic6,724
LexusLX 5707,000
LincolnAviator6,001
Aviator6,001
Navigator7,200
Mercedes-BenzGLS 580 4MATIC6,768
GLS 600 4MATIC6,768
G 550 4×4 Squared7,057
GLS 580 4MATIC6,768
GLS 600 4MATIC6,768
AMG G 63 4MATIC SUV6,724
NissanArmada 2WD/4WD7,300
NV 1500 S V68,550
NVP 3500 S V69,100
Titan 2WD S7,300
PorscheCayenne Base6,250
Cayenne Turbo Coupe6,173
Cayenne Turbo S E-Hybrid6,173
Panamera Turbo S E-Hybrid6,244
TeslaModel X6,000
ToyotaTundra 2WD/4WD6,800
4Runner 2WD/4WD LTD6,300
Tundra 2WD/4WD6,800

Section 179 has an additional stipulation that doesn’t apply to Bonus Depreciation, which is the tax deduction can’t exceed your net taxable income for the year, so unprofitable businesses won’t be able to take advantage at all and businesses with a smaller net income will be limited in the vehicle they can purchase.

Bonus Depreciation

Bonus Depreciation is a special tax code that was added as part of the 2017 Tax Cuts and Jobs Act that allows 100% expensing for certain business assets, including vehicles, in the year of purchase.

Typically business assets need to be depreciated over time (five years for vehicles), but the 2017 TCJA wanted to incentivize business spending to spur economic growth, hence, bonus depreciation was created.

In my circumstance, I was able to expense the entire $120,000 I paid for the Porsche Cayenne in the same year of purchase. That means I saved $44,400 ($120,000 x .37) I would have otherwise owed in taxes.

This is temporary, however, as the 100% allowance decreases by 20% per year beginning in 2023:

Tax YearBonus Depreciation
2017 – 2022100%
202380%
202460%
202540%
202620%

Unless congress extends this benefit, it will end in 2026. Starting in 2027, businesses would need to deduct vehicles under Section 179.

The Bonus Depreciation sunsetting between 2023 and 2026 is not as bad as it looks. You can still combine the reduced percentage it offers and depreciate the rest via Section 179.

Overall, bonus depreciation can be especially useful for businesses that had an unusually profitable year and want to reduce their tax liability. For businesses with income that’s more or less the same each year, Section 179 may be more beneficial as it allows one to spread the cost of a purchased asset over time.

Qualified Business Income Deduction

The qualified business income (QBI) deduction is a tax deduction that allows eligible business owners to deduct up to 20% of their qualified business income on their taxes. Like Bonus Depreciation, it was created as part of the 2017 Tax Cuts and Jobs Act and is scheduled to end on December 31, 2025.

As an illustration on how QBI works, let’s say Rocky made $100,000 in net income at his boxing business. Under QBI, he’s able to avoid paying taxes on $20,000 of that ($100,000 x .20). If his marginal tax rate is 24%, he’d save $4,800 in taxes owed.

For 2023, total taxable income must be under $182,100 for individual filers or $364,200 for married filing jointly to qualify for the entire deduction. Income over these amounts will reduce QBI and the benefit phases out completely once individuals reach $241,950 or joint filers hit $483,900 in taxable income.

What if your taxable income is above these thresholds? Fortunately, you can prepay future expenses to reduce your income in the current year as long as it doesn’t extend beyond 12 months or past the end of the next taxable year.

This is found in Regulation Section 1.263(a)-4(f), and it reads:

…a taxpayer is not required to capitalize amounts paid to create any right or benefit for the taxpayer that does not extend beyond the earlier of the following:

(i)12 months after the first date on which the taxpayer realizes the right or benefit; or
(ii) The end of the taxable year following the taxable year in which the payment is made.

This test is known as the “12-month rule” and something I did to get below the $364,200 threshold for joint filers. Here are some of the business expenses I prepaid:

  • 12 months of health and dental insurance
  • 12 months of website hosting
  • 12 months of YouTube consulting
  • 12 months worth of travel
  • 12 months worth of contractor services
  • 8 months of Facebook/Instagram ads (wanted to pay 12 months, but erred on the conservative side)
  • 6 months of car insurance (insurance carrier doesn’t have an option for 12 months)
  • 6 months worth of gift cards (giveaways and incentives to readers like this one)
  • 6 months worth of PR

By doing this, I went from receiving zero benefits from QBI because I was well over the income limit (thanks to all my passive income ventures) to becoming fully eligible for the entire deduction!

The tax savings from QBI comes out to $26,950 [($364,200 x .20) x .37].

How much did I end up paying for the Porsche Cayenne?

Ok, so let’s get into the nitty gritty details of my purchase. I paid $120,000 in cash for my 2024 Porsche Cayenne, but after all the tax strategies I leveraged, my actual out-of-pocket cost is $48,650*.

DescriptionAmount
Porsche Cayenne$120,000
Bonus Depreciation-$44,400
QBI Deduction-$26,950
Out-of-Pocket Total$48,650

*Numbers are rounded up to provide better clarity.

I can hear some mental grunts from some readers after looking at the table and can imagine comments along the lines of:

“John! That’s some math gymnastics you did there. You prepaid other expenses to get under the QBI limit, but you’re attributing all of it to the vehicle. Plus, you didn’t adjust your marginal tax rates to account for the lower income bracket you’re now at.”

That’s fair. But tomayto, tomahto. If I didn’t buy the Porsche, prepaying other expenses would still put me over the QBI limit and I wouldn’t have received anything close to the tax savings stated.

You may also be wondering why I didn’t buy a cheaper 6,000+ lbs. vehicle, such as the midsize SUV Toyota 4Runner with an MSRP of $40,455. Frankly, I ran out of expenses to prepay and needed a more expensive car to get under the QBI limit. It’s crazy how tax strategies influence one’s buying decision.

And… come on, it’s a Porsche 😉

Saving Money on a Personal Vehicle

I know many readers don’t have their own businesses, but if you’re considering an electric vehicle, you may enjoy tax advantages too.

I’m totally aware that there are divisive opinions on electric cars, but sooner or later and whether we like it or not, it will be the only choice, so we may as well try to save money buying one.

Federal Tax Credit

With the Inflation Reduction Act created under President Biden, you can get a tax credit up to $7,500 if you buy a new, qualified plug-in EV or fuel cell electric vehicle on or after April 18, 2023.

The credit is available both to individuals and businesses as long as you buy it for your own use (not for resale), and use it primarily in the United States. Additionally, your modified adjusted gross income (MAGI) can’t exceed:

  • $300,000 for married couples filing jointly
  • $225,000 for heads of households
  • $150,000 for all other filers

You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in one of the two years, you can claim the credit.

An important detail to mention is that luxury (read: expensive) electric cars like the Porsche Taycan or the upcoming electric Bentley SUV won’t qualify. The MSRP limits are $80,000 for vans, sport utility vehicles and pickup trucks, and $55,000 for other vehicles.

This is to prevent the super rich like Jeff Bezos and Kim Kardashians of the world from receiving benefits meant for middle America.

Although some cars that were considered expensive are no longer as expensive because of this. For instance, the Tesla X had an MSRP of $120,990 in 2022 before being lowered to $79,990 in 2023, $10 under the $80,000 limit. It’s obvious that Tesla changed the price to have their flagship SUV be eligible for the federal tax credits.

State Tax Incentives

In addition to the federal tax credit, 19 states offer incentives for electric vehicles, ranging from a $1,000 tax incentive in Alaska to a $7,500 tax credit in California.

Electric Vehicle Tax Incentives by State
(Image from Tax Foundation)

Several states, however, impose a higher registration fee for electric vehicles to offset the loss in future gas tax revenue (states highlighted in blue in the infographic from Tax Foundation).

Between Federal and State incentives and credits, you could enjoy up to $15,000 in tax credits for buying an eligible electric vehicle. That’s amazing!

The Bottom Line

I hope you found value in reading about my thought process on car purchases and that and that it has expanded your perspective on employing tax strategies that both individuals with and without a business can leverage.

But please don’t buy a car for tax savings if you don’t need one. It doesn’t make sense to spend, let’s say $50,000 on a vehicle to save $12,000 (assuming a 24% marginal tax rate) in taxes. Your out-of-pocket cost remains $38,000 – funds that could have been saved or invested more wisely.

If you think this is a wise move, please send me $50,000 and I’ll send you $12,000 in return 🙂

Lastly, everything I wrote represents my interpretation of the tax code, with insights gleaned from my accounting associates. It’s not intended to offer advice for a specific business or individual. I strongly recommend consulting with a licensed tax advisor if you intend to pursue the strategies mentioned.

About John Pham

John Pham is a personal finance expert, serial entrepreneur, and founder of The Money Ninja. He has also been fortunate enough to have appeared in the New York Times, Boston Globe, and U.S. News & World Report. John has a B.S. in Entrepreneurship and a Masters in Business Administration, both from the University of New Hampshire.

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Paul
Paul
5 months ago

As a CPA, I dislike articles similar to this and the misleading title here. Never mind the general rule of “necessary and ordinary” business expense, writing off a vehicle’s depreciation as a business expense is a very fussy topic with the IRS; detailed records must be kept. Vehicles driven related to business use need to be documented in the form of receipts, client’s meetings records/minutes, mileage driven along with gas receipts, etc.

In addition, the bottom line math is basically saying it’s dollar-for-dollar saving when it’s really not; depreciation/QBI deductions are ways to reduce taxable income as a temporary difference; it is NOT a refundable credit. Depending on the effective tax rate of the individual, the cash tax saving is not a straight-up saving of $71,350 when you buy a $120K vehicle…

Logan
Logan
5 months ago
Reply to  Paul

Paul, as a fellow CPA, I agree with you that the internet is littered with experts claiming how to buy a vehicle for “free”.

But I think John was balanced here. He mentioned he was using the vehicle for business purposes and didn’t tell readers that receipts/documentation wasn’t required. This was his actual experience and how his decision was based on his own tax situation.

Paul
Paul
5 months ago
Reply to  Logan

Logan, I’m curious: 1) would you agree with the title that the vehicle was bought for $48,650? 2) If no, what do you think the true saving in this case is? 3) If yes, what are the chances that an audit is more likely than not, and what are the steps to mitigate an adverse outcome in this situation or anyone looking to perhaps execute the same plan?

Logan
Logan
5 months ago
Reply to  Paul

IMHO, John paid $75,600 for it, strictly based on the vehicle price of $120k and his marginal tax rate of 37% ($120,000 x [1-.37] = $75,600). But his rationale that this purchase put him under the QBI limit and thus, why he assigned the QBI deduction to arrive at $48,650, also makes sense to me.

I’d advise those who plan on doing so to think through a few items. For example, if the business is a sole proprietorship or a SMLLC and you have no other vehicles to use personally, one needs to determine the percentage of business vs non-business use and deduct only the business use portion. Assigning 100% as business use without a secondary vehicle is a dead giveaway in an audit. Keep a log of miles (regardless if you plan on using the standard mileage deduction or actual expenses) and the reason for the trips as evidence. The log will help you determine the percentage of business vs non-business use, too.

Ken
Ken
6 months ago

Section 179 is great if you have a super high income and in turn super high taxes due. The vast majority of people aren’t going to be owing $150k+ in yearly taxes that would require $500k+ in profits/income. I can’t remember if the 179 would reduce taxable income from W2 income or if it only applies to Schedule C income. Or if you can have $1k in Sched C income and $500k W2 income and still take 100% of the 179 deduction. Also, it would be helpful to mention that 179 is effectively a nonrefundable credit (when taken 100% in the year of purchase) even though it’s called a deduction.

Great buy though. Just know that it will be worth $50k in less than 5 years. Now, some of their sportscars may actually appreciate 😉

Ken
Ken
6 months ago
Reply to  John Pham

So because 179 reduces W2 tax liability you could technically have a sole-prop biz with $100 profit but $500k income from a regular W2 job and take the full 179 deduction/credit in purchase year. Legal of course, but man the odds of getting a knock on your door from a helpful IRS agent is almost 100%. Not surprised they’re sunsetting this rule.

Please add a comment subscribe here, otherwise people will never come back to the site and check for replies. I happened to have this open and refreshed for the hell of it, but otherwise I’m not manually going to every page I’ve posted on. And you can expect this behavior from nearly everyone. Drive that site traffic!

Ken
Ken
6 months ago
Reply to  Ken

Subscribed.

Ken
Ken
6 months ago
Reply to  John Pham

See it now, thanks. Can you set it to default to subscribing? If not you’ll get more “subscribed” posts as there’s no way to subscribe without posting unless I missed it.