Not on a purchase they don’t.
And the resale value is significantly below the residual value on the lease.
Well, once you acknowledge that you have no legal ownership in the car you lease, and it’s essentially a long term rental it’s actually a great analogy.
I beg to differ. For having a car, you several choices. There are different sales tax implications of the various choices. As others have pointed out, you often pay less sales tax leasing (renting) a car vs. buying, so your whole premise is wrong.
For lunch, you have several choices. There are different sales tax implications of the various choices. You can go to the supermarket and buy your food there, cook it yourself, and there is no sales tax. You can go out to eat, and you pay sales tax on the total cost of the raw food, the labor, the rent, etc. Why no outrage there?
Tax laws are there to raise revenue, not to make sense to rookies.
The restaurant analogy was poor. The rental car is relevant.
I know, which makes it a poor example.
You can only compare tax when leasing and purchasing have the same sales price, and same rv/trade in, i.e. on both ends.
Why not? One should be making the comparison based on actual circumstances rather than a made up direct comparison that almost never actually exists. It’s very rare that the lease rv is actually an accurate representation of what the resale value will be at lease end.
It is totally reasonable to have a conversation about quantifying the real tax differences… so let’s actually do that.
You really are taking this mental masturbation exercise and not letting it go.
If you are talking about leasing an EV, lots of manufacturers are passing along $7500 lease cash that you would not get if you purchased it. Also, EV’s are realistically way over valued in 2 or 3 years in terms of RV vs actual wholesale/auction prices.
So your premise of equal sale price and same RV/trade in are not valid assumptions in the real world in majority of the cases. Many manufacturers manipulate RVs to help encourage leasing on some vehicles, and most vehicles do not lease well. And market conditions change- in 2020, there was minimal MF and in 2023, it pays a significant role in leasing.
RE your question of taxes, you pay sales tax on full price of vehicle vs just the portion you use in a lease. (in most states). Would like to pay sales tax on $90000 or on $900/month x your 24 or 36 months lease term?
Is it really necessary for this to be dragged out in 46 messages?
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When comparing tax of course you’d set the basic straight.
This is NOT a discussion about whether leasing makes more sense vs purchasing. This is about how tax is calculated.
Working with an example where only leasing get $30000 discount and assuming purchasing doesn’t has nothing to do with the topic.
This is a conceptual discussion. If you don’t understand the point, don’t reply.
I am not talking about a real comparison. It’s about how the tax is calculated. If you want to talk about EV, in my state, EV pays 0 tax.
Discounts come and go. Last year only purchasing EV/PHEV get the tax credit, and now some leasing and some purchasing will both get you that $7500. It has nothing to do with the current discussion.
No, it’s a discussion about which pays more tax… and the answer is always going to be “it depends”.
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There is nothing conceptual about this. The ‘interest’ on a lease is the cost to use the banks money to purchase the vehicle and rent it for a period of time. This is usually referred to as a lease fee, not interest. Therefore you are not paying tax on interest, but on the lease fee portion of the lease payment.
Exactly. It depends. Thank you.
It’s a misconception that leasing automatically pays less tax.