Chicago lease w/trade in

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1

i live in chicago and have a question about how a trade-in works in a new lease situation.

first of all - yes, i know that between state, county and the chicago city “use tax”, i will be paying a ridiculously high tax percentage. am i happy about it? no, but i love living in chicago and there are some high costs that come along with it and this is one of them. i need a new-ish, higher end car for work and since i’m still feeling the ripple-effects of covid in the form of smaller paychecks, i’m exploring leasing because it’s the only feasible way to get a vehicle that will check those boxes.

i greatly appreciate being able to use this forum to get the information i need and i’m thankful to those that are willing and able to provide that information, but commentary questioning my intelligence for even considering leasing in chicago, or that i should just buy instead of leasing, etc., really isn’t very helpful.

my main question - it was my understanding that if i trade in my vehicle (which i own outright) the amount they’re paying me for the trade would be subtracted from the price of the vehicle being leased or somehow credited ‘below the line’ as opposed to being considered a down payment, which would be subject to 20% tax - and it was already taxed.

i’ve first focused solely on negotiating the price of the car and if we arrived at the right number, go from there and yesterday - for the first time - i actually got to the point of having the trade-in conversation with a dealer and was told that trades are, in fact, considered down payments and would be taxed. this can’t be right…can it?

a secondary question - to keep my monthly payments below a certain number, i had planned to pay the chicago use tax (along with acquisition, dealer fees & gov’t. fees) at drive-off, but was told that pre-paid tax amount would be considered a down payment (since there is no way of breaking it down/categorizing it) and therefore, taxed - so i’d be paying tax on tax. this is somewhat believable, as i imagine most people wouldn’t want to pre-pay and would just have it included in their monthly payment. i can’t help but think there has to be a way around this.

can someone please enlighten me?

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Chicago is the murder capital of america and has one of the most corrupt political structures. Good luck

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There is no lease trade in tax credit in Illinois since the tax law shifted to a monthly payment based system in 2015, so you get to throw all your money into the bonfire that is leasing in Chicago.

There was a trade in tax credit prior to 2015, but that’s when you were taxed on the whole value, which was worse anyway.

Fast And Furious Fire GIF by The Fast Saga

4

Move to Indiana or incorporate an llc there.

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I think the question is how does Chicago & IL state treat the trade-in? Usually during a purchase your understanding is true as you’re doing an exchange.

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Yeah, just ask for the check for the trade-in value.

Don’t put $ down.

Pay the tax monthly, can’t be that much of a difference in monthly payment

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i have an llc - what does that do?

8

thanks! where do you live?

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I live in the Chicago suburbs for 35 years and lived in Chicago for 30 years

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Have the lease under the company name and write it off, in Indianna different tax fleecing.

11

Went lease hacking to tax “cheating” in less than 10 seconds…

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