E300 AWD Demo 10K miles/ year - $358/ month + tax

Ask the Hackrs
41

I’m not in TX, but just trying to learn about their laws. So the tax credit is given to the dealership and they can pass it onto whichever future customer they like? Are these tax credits only for leases or can they be applied to purchases as well?

42

AFAIK the credits are given to the cars’ owners, i.e. the lessors and leasing companies. I guess the leaseCo’s allow the dealerships to distribute them to retail customers as they see fit.

I would be surprised if they didn’t apply to purchases as well.

@Shellzj can chime in.

1 Like
43

Thank you @max_g…this is starting to come together for me now. In VA my understanding is that there is no tax credit on trades broadly speaking. In other words, on a vanilla purchase, you would pay tax on the sales price before any trade in as opposed to being taxed on the net like in other states. So, it would follow that there are no tax credits being generated on lease returns. Is this consistent with your understanding as well @Ursus?

44

In purchase transaction, the ownership changes (from leasing Co/Financing ARM to the retail buyer) - hence the credits do not apply. That is my understanding.

Besides: doesn’t the financing/leasing ARM want more/repeat business ? (ie., more leases and repeat business) – than merely contribute credits towards one-time sale !

The Tax-credits are far-and-few between. BMW generally does towards the end-of-the-year in TX (so do we were told)., while Mercedes financing ARM MBFS does after 15th of month … There are “partial credits” (upto 3% sales-tax credit) vs, full-credit (a rarity, but it is possible).

45

Which dealership in TX is this at? I’m in Dallas and interested.

46

I applied trade-in equity to CCR and taxes/fees on the new car purchase. So I paid tax on the selling price after trade-in CCR. At least that’s how I remember it.

47

Yes, tax is a little complicated in Texas. To understand the tax credits, think about these points:

  1. The leasing company owns the car (i.e. MB Financial)
  2. In Texas, if you buy a car while trading in another car, you’re only taxed on the difference. For example, if you buy a $30k car but trade in a car worth $20k, you only pay tax on $10k
  3. So the leasing company gets tons of tax breaks because they are constantly buying cars (new customers leasing) but also trading in (existing customers trading in)
  4. So sometimes out of the graciousness of their hearts, they will pass those savings on to customers in the form of tax credits

(Of course this is just my understanding of the law; I’m not a CPA for a lender, but I wish I knew one!)

But I have to admit, tax credits certainly aren’t universal and are very variable:

  • I paid no tax on my BMW in 2014.
  • Two months ago, the Alfa dealers said they had tax credits with Ally Bank only.
  • I got an email from a Cadillac dealer the last week in July saying they had tax credits on XT5s for one week only.
  • This month, 1 of 4 local Volvo dealers in Houston said they had tax credits, while the others said they did not. (A dealer in San Antonio said they did have credits).
  • Before the hurricane hit, none of the Chevy dealers said they had tax credits for Volts - they said, “not on Volts,” leading me to believe they have credits for other models.

I think you should try to find a deal with tax credits (since this is a hacking forum), but don’t be surprised or super depressed if you cannot get them, especially since other taxes in Texas are so low or non-existant otherwise.

48

To add to your point #2 you mentioned:
If you take your leased vehicle and traded-in to another make/used-car dealership (instead of usual lease-return or lease-end-buyout)., you will NOT get the benefit of “taxed on difference” to the 2nd point made by Shellzj.

Ie., expect to pay tax on full price (not the smaller amount: “price difference”) of new vehicle if you planning to buy (or lease) from another Make/manufacturer.

49

This might vary by state, but it worked for me earlier this year (NC) when I purchased my wife’s Expedition. Traded in her Odyssey and the basis the sales tax was calculated upon was reduced by the value of the traded in vehicle.

50

@cheapdad00 was the Odyssey leased or did you guys own it?

51

Leased vehicle, 10 months left on lease but it had equity due to poor nature of Honda leases and very low miles. They ended up buying the vehicle and listing it on their lot.

52

My understanding is that if you have equity in your lease, and you trade it in, you will get the tax benefit.

The reason is that to take advantage of the equity, you are buying the car from the leasing company and then selling it to the new dealership.

53

Just the membership is okay. Right?

54

What is the best rebate to apply currently? Penfed, USAA or United Mileage?

What is the mf before any msd? .00082? Does this include the .0001 discount for autopay?

Thanks!

55

Is that Bethesda mercedes ? They slaughter people :weary:

56

Mf on 4Matic is 0.00092 before msd or autopay. Mf on non 4matic is 0.00117, so depending on discount 4matic is a better deal. Keep in mind residual for 4matic is 59% vs 60% for 10k

57

Also both PenFed and United are $1500, but United gives you 25k miles which is good for 1 domestic round trip.

58

before or after tax?

59

Sounds like Mercedes of Akron Ohio