In Texas, you pay tax on the entire vehicle value up front and then again on the buyout, so you want to minimize the buyout value.
In California, you pay tax monthly on the amount paid and then on the buyout amount. If you don’t pay much upfront, you won’t pay much tax. Your buyout tax will be higher, but it’s balanced by the low initial tax. If you make a big down payment, you’ll pay tax on it. You’ll then pay less tax on the lower buyout, but with higher upfront. It basically works out to the same net tax in either situation.
Quick question regarding the $7500 for VW ID4, is the $7,500 considers as lease cash? If yes does that gets subtracted from as a cap cost reduction which will imply sales tax on the $7,500 in CA or is it consider as a down payment which will not get taxed in CA?
Can anyone help provide information on this? The goal is to buyout in the 1st month after lease, need to understand if tax will have to be paid on the $7,500. (which will reduce the benefit of the credit by the tax paid to CA)
Down payments typically are applied as cap codt reductions, and are taxed. Only an amount going towards a non-taxed fee wouldnt be taxed. That goes for money coming out of your pocket or applied incentives.
How can I have VW/Hyundai apply the $7500 as a applied incentive instead of cap cost reduction? Is this negotiable with the finance team of the dealer or this gets dictated by the manufacturing finance/lease company and may differ based on the manufacturer?
You can also adjust your tax withholding to account for the $7500 credit. You won’t get the money right away, but you will realize it over the course of the rest of the year, rather than waiting until you file your taxes to get it.
I’m going to preface this by saying that we’ve never leased a car and we’re not really interested in leasing a car; we pretty much drive our cars until they fall apart. But we’re in the market for a new car (son is turning 16) and we’re committed to getting an EV. However, our income is too high to claim the $7,500 tax credit for the purchase of a new EV. I’ve been reading that there is no income limit if you lease and that the lease credit applies to more models. That’s what led me here.
My wife will be driving the new car and she really likes the Genesis GV60. I pulled up the GV60 on my local dealer’s website (Genesis of Chantilly [VA]) and they are offering “Savings of $7,500 from the manufacturer” under the lease option. That’s more than 10% of MSRP, so it’s definitely got me intrigued. Even if I end up losing half of the tax credit by going the lease route, that’s still some significant savings.
We have enough cash on hand to buy the car outright. But can we get a better deal by leasing it first and then buying it? How would that even work? Do we have to wait until the lease period is over and then buy the car? Or can we turn around and buy it immediately after leasing it? That sounds suspiciously like a straw purchase, but for a few thousand bucks, I’m willing to risk it.
Strategically speaking, how should I go about doing this? Should I be upfront with the dealer about my intentions? Should I look in to other leasing companies like Ally (I bank with Ally so that’s kind of convenient). On the dealer’s website, you can choose the term, miles per year and amount due at signing. Does any of that really matter to us?
Sorry for all the questions. I’m a total neophyte and reading this thread has left me even more confused. I’d appreciate any advice you all can offer.