I believe the tax deduction would be available at the time the buyout provision kicks in. At that point it would still be an OEM vehicle at its first transfer of title. I would assume, though, that the deduction would only apply to the residual purchase price. Of course, that assumes that the tax-favorable treatment is still around when the buyout happens, but you'll need to discuss that with your local legislator.Total cost to buy the car after 3 years is $23500. Total cost for a 3 year $21k loan at 6% is $23000, for a P&I of $639. Better rates (such as 5% are available, and other terms, such as 5 year). If you lose the $2000 tax deduction at 28% tax level is $560. So the lease program will on the surface cost you approximately $1k more for the same car, but allow you to get out of the car easily after 3 years if better technology comes along, etc.
Naturally, I also may be entirely mistaken, as I have not read the specific provision in quite awhile.
-Adam
