Would anyone from Arizona be able to explain the taxation that occurs with a lease in this state? Pretty confused by the process. Looking at obtaining a BMW lease in CA and bringing it here, we’ve been using an 8.6% sales tax in the LH calculator. My understanding is that this is put into the monthly payment of the vehicle. I’m not sure where the 8.6 comes from though, as I’ve seen a variety of other numbers posted. I’ve also seen a bunch of different mentioned taxes, such as “Vehicle Use Tax” and “Vehicle License Tax.” I live in Phoenix if that helps, and this is my first purchase/registration in the state - just trying to understand if all of the savings from an out of state lease are going to be wiped away here. Thanks!
Why would the savings be wiped away? You will have to pay your local tax regardless of where you get the vehicle. Assuming you will be leasing If you get it from CA you will probably have to pay CA tax on the incentives and drive offs. You need to research your local tax. I believe Maricopa is 6.3% but not 100% sure.
Where you lease the vehicle from is irrelevant unless you pick a state that charges all taxes up front. If you lease from CA for example, they will calculate your first payment based on their sales tax but your second payment will be based on your garaging address. 85054 for example is 8.3%. You are only taxed on your monthly payment. The garaging address dictates anything and can change at any given time if you relocate. For example, if 6 months into your lease, you move to Texas, your sales tax goes away completely.
Just know what your base monthly payment is and add your specific sales tax rate to that. That will be your monthly payment going forward. They will probably charge you $100 for a “one way permit” which permits you to drive the car to AZ without paying for registration in CA.
Hope this helps.
This does. Thank you both. I think more specifically, I am confused which taxes we are expected to face since I am new to AZ. It seems like the “Vehicle Use Tax” may not apply since the car is to be first registered in AZ, and my understanding is that this tax is for cars the were first registered and taxed elsewhere? The vehicle license tax however is the one that remains more of a mystery. My understanding is that this will add $1000-1100 per year in payments, unless this is Arizona’s form of sales tax and not an additional expense.
What is your zip code?
85014 , Maricopa County
That’s basically just a yearly registration fee. It’s a bit more than the annual CA registration fee. For ex, if you buy from CA, you won’t pay for CA registration at signing, and will pay for AZ reg and vehicle use tax instead when you reg in AZ.
On my 3 series, CA reg was something like $600-700 at renewal, and reg+vehicle use tax was $800 in AZ.
Vehicle use tax is based on original msrp, not sale price. There’s online calculators for it.
My first transfer of lease was from SF. My monthly with tax was lower than the previous owner paid, as my rate 8.05% (85255) was apparently lower than the previous lessee. BMW Fin Serv took care of it.
My second direct lease was a bit complicated. We agreed that they will have a one way permit and I purchase the cheap 3 day permit for the AZ part. With the excitement about the new car I forgot that they never gave me the CA permit and I left without it not realizing it until I was 2 hour out but still in Friday afternoon LA traffic. No way to go back…
This car was joy to ride and ~ 2 miles before the CA/AZ border, I triggered a cop at the median waiting there with lights off. I saw him switching the lights on in the rear mirror but he had trouble to make the U turn and join the traffic and I lost him, pulling into stop on the AZ side .
Then I have never received the paperwork from the dealer to do the registration, they requested to do it with a PHX agency by themselves.
I came also across another oddity. The car is 2018 and was titled that year in CA, but for AZ, the fact I registered it in 2019 meant they calculated the use tax according to their tables for a 2019 MRSP which was quite high.
I realized they do not count packages for the calculation, only the MRSP of the basic model.
VLT is a bear in AZ, especially on a brand new car. Definitely effects the economics of leasing, just because you’re always in the highest tiers of the calculation. My ‘17 Expedition is like $650/year, but my ‘07 FJ Cruiser is around $50.
What about taxes on incentives for AZ? I believe they charge sales tax on incentives - any difference if you lease the car out of state?
Thanks all. Yes to sales tax on incentives as well! So with the mention of VUT and VLT, are both to be expected at time of registration? Or are these interchangeable terms?