How will lease assumption work in this case?

Ask the Hackrs
1

I live in MD and my lease payments include MD tax assessed on the entire car value.

Who will be paying the balance of MD tax if somebody takes over my lease?

2

I just did a lease takeover on an RC F from Delaware. The stated payment went up a few dollars, because the car is now in Indiana and our taxes are higher. So, if the vehicle stays in the same state, nothing will change and the new lessee will pay taxes as you have been. If it moves out of state, the taxes will be adjusted. Most states will give credit to the new lessee for taxes paid in another state, so they shouldn’t get hit with anything other than the monthly difference.

3

Thank you for the reply. I am just missing who will be paying the leftover taxes to the original state.

Let me give you a highly simplified example to keep numbers whole.

Car cost $60,000
RV 40%
MD tax 6%
Lease term 36 mos

MD is owed 60,000x6% = 3,600

Monthly payment (60,000 x 60% + 60,000 x 6%)/36 = 1,000 + 100 = 1,100

I keep the car for 6 mos and somebody else assumes the lease.

In 6 mos I paid to MD 600. Who will pay MD the 3,600 - 600 = 3,000?

4

If the taxes on they’ll cap cost are part of the monthly payment, my assumption would be that the payment would stay the same as the leasing company is still responsible for paying that to Maryland. The new state should offer a credit for the taxes already paid (or future payments). I don’t see how they could tax it twice. I’m going to hit up a few lease forums and see what I can find.

5

I’m finding wildly varying information from state websites, lease forums, and lease swap sites. When I did my assumption, the best source of information was calling the manufacturer directly. The local BMV was clueless.

6

So was MB. I will call swapalease

7

Maryland taxes up front so either you paid them upfront or rolled them into the lease either way the tax burden for Maryland is paid. It’s a complete pain in the ass to get a straight answer. The question the assume needs to ask is if their state recognizes taxes paid to md. I transferred my Bmw from VA to Md and the assumee only had to pay the difference between the Virginia tax rate and the Maryland tax rate. But I literally wasted 4 hours of my life calling va and md DMV and BMW financial.

8

I rolled my taxes into lease. I see your point that MD taxes will have to continue to be paid for the lease duration. My guess the assume will have to also pay his state taxes as well.

9

I am not sure you are understanding. The taxes are already paid. It was a lump sum paid when you leased. So while you have only paid for a portion of the tax it’s not a monthly item. It’s like if you bought an accessory or maintenance plan for the car, it’s paid for up front and you are paying it back monthly.

10

Thanks. That’s what I was trying to say, but you said it better.

11

Correct. The original state will not waive the tax payments. The only question is if the second state will give credit for the tax paid to other state. My situation was considering lease transfer from Ny to MA.

12

Thank you, I understand now that MB (in my case) paid MD my taxes immediately. Still the second owner will have to pay them back to MB

13

That’s right. Unless he is really lucky and lives in a state with tax reciprocity with MD, he will be paying tax on top of the $1,100 payment in your example.

14

Hi, Do you happened to know how MD calculated the tax for the assumee ? I am thinking to take over a lease from NJ. Called DMV and BMWFS, and getting run arounds, no definite answer.

15

I don’t know anymore than I posted above. Sorry.

16
17

Please don’t necromance threads from almost half a decade ago.

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