Leasing vs. buying a car: What physicians need to know

When it comes to shopping for a vehicle, is it better to buy or lease?That all depends on factors such as the type of vehicle, your driving patterns and how long you intend to keep your vehicles.Mohamed Bouchama is a senior consultant at Car Help Canada, a non-profit that helps consumers navigate the automotive marketplace. He says most of the physicians that he works with tend to lease their vehicle—particularly those who drive luxury vehicles and get a new ride every few years.“The majority of people who buy luxury cars, they lease them. They don't buy them because it's a little bit cheaper. And also, the type of people who look for luxury cars, they like to change them every three, four years,” he told the Medical Post.Luxury cars typically depreciate much faster within the first few years of ownership compared to non-luxury vehicles, often making it more financially beneficial to lease rather than buy.According to data from U.S. car-buying platform iSeeCars, the top three fastest depreciating models were the Maserati Quattroporte, the BMW 7 Series and the Maserati Ghibli. All three of these models lost an average of more that 60% of their value within five years—significantly higher than the overall average five-year depreciation of 38.8%. Other brands that dominate the list of fastest depreciating vehicles include Infiniti, Cadillac, Audi and Jaguar.On top of that, luxury cars typically have much higher maintenance costs once the manufacturer’s warranty period ends. Leasing a new vehicle and giving it back before the warranty ends can help you avoid those headaches. “A lot of people like to lease because they don't want any headaches with owning the vehicle. They can change the replace the vehicle every three years. They get a brand-new vehicle. Whereas, if you purchase, you can keep the vehicle as long as you want, but the maintenance is a little bit more,” Bouchama said.However, if you’re planning on buying a non-luxury vehicle or planning on keeping your vehicle for longer than five years, experts say buying is typically a better option.“If you are someone who's going to buy the vehicle and drive it for many, many years until there’s not much left of it, owning it generally is better,” Dr. Mark Soth, a Hamilton, Ont.-based practicing academic intensivist who writes the Loonie Doctor physician finance blog, told the Medical Post.Buying may also be a better option for those who put more mileage in their vehicles, such as rural physicians or physicians who make frequent house calls. Most leases typically have a limit between 12,000 to 24,000 kilometres and exceeding the kilometre allowance will result in extra charges—typically 25 to 30 cents per kilometre.“The mileage is there in the contract when you lease. When you purchase, there is no mileage,” said Bouchama.Tax implications There are also tax implications that may make it more favourable to lease a vehicle.For doctors and other self-employed individuals who buy a passenger vehicle, they can deduct capital cost allowances for vehicles priced at up to $38,000 ($61,000 for electric vehicles) before sales tax in 2025—$38,000 is around the cost of a brand-new base model 2025 Toyota Camry.Those who choose to lease a car can deduct up to $1,050 per month in leasing costs, which can get you a much nicer vehicle. For example, a 2025 BMW 5 Series on a four-year lease can be had for around $1,050 with a $3,000 down payment.However, Dr. Soth points out that you can only write off your vehicle expenses proportionate to the amount of business kilometres that were driven. For instance, if you drove 10,000 km in one year and 2,500 km of that mileage was for business purposes, you can write off 25% of your vehicle expenses.“One of the biggest troubles that doctors get themselves into is thinking they can have this business vehicle and just write off everything as business, but you can't. Only travel between two places of business counts,” Dr. Soth explained.Business driving does not include driving between your home and workplace, Dr. Soth points out. “Most physicians, they actually don't have a lot of business travel . . .. If you were to travel to a locum or something that's not your usual place of business, that could also be a travel expense, but just routine driving back and forth to your regular place of work does not.”Another question to consider: should you own or lease your vehicle personally or through your medical corporation?If your corporation owns or leases the vehicle, you can deduct all of your vehicle expenses through the corporation, but any personal driving will be counted as a taxable benefit. That mean you’ll have to keep track of all mileage for a corporate-owned vehicle, whereas you only need to keep track of business mileage if you personally own your vehicle. For simplicity’s sake, Dr. Soth says he prefers to own his vehicle personally.“I've done it both ways. I had a corporate-owned vehicle and tracked everything and paid for everything to there and then I decided to do it personally [owned] just because when it simpler for me to just get it reimbursed once a year rather than having to always have my corporate credit card with me and having to pay through everything through the corporation,” he explained.“This is one of these areas where you definitely want to talk to your accountant about it for your specific situation.”

Leasing vs. buying a car: What physicians need to know

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