| dpham |
| If I lease do I pay taxes on the purchase price of the vehicle? There's also taxes with the lease payment. What is this tax? |
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| Echo2625 |
| You only pay tax on the amount of your lease per month. You do not pay tax on the entire vehicle. |
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| dahacker |
quote:
Originally posted by Echo2625
You only pay tax on the amount of your lease per month. You do not pay tax on the entire vehicle.
This is not true for every state. Sales tax laws vary by state.
For example, in Maryland you pay tax on the full price of the car for lease OR buying.
My favorite kicker is in Maryland that if you opt to buy the car at the end of the lease, you then pay sales tax again. |
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| erictiger |
| When I lived in Ohio, I only paid tax on the monthly payment. However, when I move to Illinois, I have to pay tax on the whole vehicle. |
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| texrb |
quote:
Originally posted by dahacker
This is not true for every state. Sales tax laws vary by state.
For example, in Maryland you pay tax on the full price of the car for lease OR buying.
My favorite kicker is in Maryland that if you opt to buy the car at the end of the lease, you then pay sales tax again.
That is also the case in Texas - you pay full tax when you lease & then full tax on the residual if you buy it. |
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| JeffK |
I have heard about the situation in Texas and I believe in Texas you do not lease but in fact buy with a balloon at the end - strictly because of taxes. (you can walk away from the balloon without penalty)
Here is another twist: I recently assumed a lease from a New York resident who paid the taxes up front. I assumed all I would be responsible for would be the monthly payments.
When I went to register the car, I was told I had to pay the taxes on the balance of the lease payments. This was in excess of $2500, an expense I had not anticipated. The motor vehicle department was considered that this was a transfer of ownership subject to sales tax.
The next day I went to a different motor vehicle department. There I was told, that since the owner (the leasing company) remained the same, title did not transfer and that no tax was due!
Go figure it out!
JeffK |
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| texrb |
Jeff,
Sorry to correct you, but the leases in Texas are closed end leases, just like any other state. The problem here is they charge sales tax to the leasing company - which then passes it right along to you. Texas believes they have the right to get full sales value on every sale - from the dealer to the leasing company & then from the leasing company to you IF you choose to buy at the end.
AHFC will sometimes not charge you the sales tax on select lease vehicles (just to move them) but that doesn't happen very often. It's also a pain in the a$$ if you trade in a lease vehicle on a new one because you also do not get sales tax credit for the vehicle value, since you do not own it. Once again, the state says to get credit for sales tax at trade in, you must pay off the vehicle & buy it from the leasing company - pay the sales tax - then trade it in. The net effect is the same - you pay the sales tax & then get sales tax credit on the same value for the trade.
It's really quite a scam because the dealers will not give you a sales tax credit on your trade & then turn around & show the trade in as a purchased vehicle, not leased vehicle & then the DEALER doesn't pay the state the tax. This adds up to a nice additional profit for the dealer. I know this has happened & if Texas legislatures would get the heads out of their ***, they would change the law. |
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