Thought so but had to check. 2nd that, in PA too and registered to my wife only.
Quick question, did you create your amortization excel file or was it downloaded from Volvo?
Thanks!
I created the amortization excel file. I would never use or rely on someone else’s work.
Impresisve. Can you share the file?
It’s constructed in exactly the same way that a loan amortization schedule is created…
Interest = Principle Balance x Rate x Time.
In a lease, it’s…
Lease Charge = Lease Balance x Rate x Time
The monthly book depreciation is analogous to the monthly principle repayment in a loan and, the lease charge, levied on the outstanding lease balance, is similar to the interest charge, levied on the outstanding loan balance. The annual lease rate, aka actuarial rate, is calculated using Excel’s RATE financial function as follows…
12*RATE(term,pay,-cap,res,1)
The next month’s lease charge is computed by multiplying the previous month’s “beginning period lease balance” by the monthly lease rate.The current monthly book depreciation is simply the monthly payment - current month lease charge.
Above all, you need to look at your lease contract to determine exactly how your lease balance is calculated. Based on the method given, only then can you build a lease amortization schedule.
The only way you’re going to learn this stuff is to do it. I’m not doing you any favors by handing you my spreadsheet. That will only enable you to be brain lazy like so many Americans. Do the research. Read financial mathematics textbooks. That’s what I did. And really, it only takes a few hours to do paying big dividends in the long run (no pun intended).
EDIT:
I’ve noticed that the number one weakness on this website is that most posters can’t compute payments, taxes, etc. Instead, they rely on some online calculator and, as such, are totally clueless as to how the calcs are done. If you can’t do the math, you leaver yourself wide open to getting screwed in some cases. Most Americans suck at math. I know, I used to see it every day. Taught a differential equations class to EE’s once and, I was pulling my hair out wondering how they got into the class knowing very little about integral calculus.
Just the other day, some NY tax attorney on this website, when asked if tax is paid on tax if the tax is capped, responded by saying “not exactly”. I interpreted that to mean that she wasn’t sure. What the hell kind of answer is “not exactly”? Either it is or, it isn’t. It’s not rocket science! Turns out, that capped tax in NY is taxed! See my post ny sales tax if you’re interested.
So, just for clarification: you completely changed your post and did not learn anything new from her, as was in your original post in your referenced thread? Why not to just write another post after you did learn something new?
You can’t be serious! Yes, I did learn a FEW things… tax on tax pertaining to capped NY taxes WASN’T ONE OF THEM! What I learned had nothing to do with taxes. Are ya gettin’ this? Didn’t change my post (I issued an ADDENDUM which means to “add”) nor did I contradict myself. Re-read my post only this time, please read for comprehension.
Keep discussion civil and on topic. Personal attacks and unrelated nitpicking will not be tolerated.
Thanks for flagging my post! How’s this…
Computing NY taxes IS NOT ROCKET SCIENCE! Everything else she wrote was outstanding (except tax calculations). Never ever changed my tune. You’re nitpicking.
Hope I didn’t offend you!
How about people just stop being jerks and only provide information on what you absolutely have solid knowledge? Anyone who is an attorney knows that an answer of “not exactly” is perfectly reasonable and true, because the most famous answer in the context of legal items is "it depends."
Even NY has said you’re not exactly paying taxes on taxes. If you want to debate the legality of it, then let’s discuss how NY charges a county use tax in some counties on your registration, and a use tax should only be implemented for the “privilege of using something (property) in a state when the state’s sales tax has not been paid,” to say it as simply as I can.
Just re-posting from landfill, so there is no confusion whether I flagged the post:
I did not flag your post, […]
Just so you comprehend your flip flopping better: going from “It’s awesome and I learned a few things!” to this:
@28firefighter - still think the above is nitpicking?
To be candid, I don’t care what NY has said. Any mathematician that sees the numerical expression (.08/(1-.08)) x 18000 immediately knows that tax is levied on tax as I have already proven.
Show me an instance where tax isn’t computed on tax in a consumer retail lease, originating in NY, where the tax is capped in the lease for NY residents for which the vehicle is garaged in NY. Unless I’m mistaken, I can’t imagine any exceptions and don’t believe that the CYA “it depends” or “not exactly” applies in the case of Pub 839, P. 16, Example 9, Lines 1-7 which is what I initially referenced.
No flip-flopping. The statement applies to calculation of taxes. End of discussion.
There are different ways to gross up the tax, as well as capitalize it into the payments without essentially being “taxed on tax.” I purchased my car in NY, am a resident of NY, and garage it in NY, per your requirements.
My tax rate is 8.375%. This is how my lease was actually written, adding the tax and the acquisition fee to the cap. cost, and I paid a partial cap. cost reduction to cover most of the acq. fee and thus lower my payment: How lease was wrtitten
Here is how my lease would look without the taxes being capped and separately accounting for the acq. fee: Bifurcated version
With the tax not rolled in, it says $1,267 in tax is due, or $35 a month. The calculator puts my payment at $396, which added together is an effective $431 a month, $2 more than what I pay. The depreciation on this is $13,752, that tax is $1,151; $1,193 was added to my cap. cost. The difference could be rounding somewhere, but also because part of the incentive might have been taxable. I don’t have the breakdown of that.
The point is that when you add the taxes and the acq. fee to the cap cost, then make a cap cost reduction, which is essentially paying the acq. fee as a down payment, you are not paying more in taxes than you would be otherwise.
I know you said “you don’t care what NY says,” but that’s not how it works. If you end up in court, what the state has issued or previously determined in a court case is what will rule the decision.
It clearly says that a dealer DOES NOT have to use the method in example 9, and what is due is tax on the total of the payments due on the lease.
So how about we say enough with this already, and there are ways to not pay tax on tax? You could run in a continual circle with it, because then there are more finance charges, and each time you increase the capitalized amount, you would essentially have to add more tax too, in an endless loop.
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Greetings Ashleigh and many thanks for responding!
Please don’t take this personally (it’s not your fault) but, the above quote is one of many reasons why I believe the Judicial system is a national disgrace. In the case of NY State, you claim that they have said that taxes aren’t taxed. Yet, the mathematics, in some cases, clearly shows otherwise. That’s like ignoring the truth or facts and doing or saying as they damn well please. I’m a mathematician and was a practicing actuary years ago. More recently, I negotiated many leases in NY where the taxes are capped and, in every instance, there was tax levied on tax as I explained to a Glen Cove sales manager almost 4 years ago. Below is what I believe to be a very compelling argument that definitively proves that tax is levied on tax when the tax is capped……
Pub 839, Pub 839, Lines 1-7, at P.16 calculates the total tax as follows…
Total Tax = [.08/(1-.08)] x 18000 = 1565
This is equivalent to and, no different than…
.08 x 18000 + .08 x 1565 = 1565
tax on the total base payments + tax on total tax = Total Tax
With all due respect, I would rather see your lease agreement and accompanying lease worksheet as I pay little attention to the LH calculator. It does have several shortcomings and, as such, I attach little credence to it. I want my calcs to be spot-on, not estimates or ball park.
Yes, there are situations where tax isn’t taxed such as when taxes are paid upfront by the lessee. If I would argue against the State of NY in front of a panel of five unbiased experts (not some judge), I’m sure I would win hands down that there are, indeed, instances where tax is effectively levied on tax. It is very obvious that example 9 in Pub 839, taxes tax. No doubt about it. Not to be a jerk but, if you were to contact the Courant Institute at NYU (pick your poison), they’ll tell you the same thing.
Regarding cap reductions, the mathematics doesn’t know nor does it care if you’re applying it against the acq fee or taxes or whatever. The base payment is computed by adding all taxable capped fees (excluding capped taxes- example 9 for instance) to the agreed upon value (sell price) to get the gross cap. Then, we deduct all cap reductions to get the net (adjusted) cap. This, coupled with the money factor, residual, and term, determines the base payment whose only purpose is to determine the total payment tax as in example 9 (18000). The base pay is multiplied by the term and the factor t/(1-t) to get the total tax where t is the tax rate. This is no different than…
t x sum of the base payments + t x total tax = total tax.
and, therein, lies the rub… the component: t x total tax
You said…
The point is that when you add the taxes and the acq. fee to the cap cost, then make a cap cost reduction, which is essentially paying the acq. fee as a down payment, you are not paying more in taxes than you would be otherwise.
I know you realize that taxes are levied on cash cap reductions as well as rebates in some instances. Whether cap reductions are taxed or not, depends on the nature of the cap reduction.
So, now we come to the most important issue of all when you stated…
It clearly says that a dealer DOES NOT have to use the method in example 9, and what is due is tax on the total of the payments due on the lease.… plus the language that follows…
Here’s my question just to be clear…
Can dealers ignore the methodology used in example 9, lines 1 thru 7 to compute total taxes? Can they ignore the so-called “gross up” factor and simply compute total taxes due as follows…
.08 x 18000 + taxes on taxable fees paid upfront and, therefore, avoid tax on tax?
In other words, dealers aren’t bound to using the factor (.08/(1-.08)) in example 9 even if all the conditions are met (e.g., capped taxes)?
When you say that there are ways to not pay tax on tax; are you saying that tax is levied on tax in some cases such as example 9, lines 1 thru 7, if the dealer so chooses to use this method?
I guess I’m puzzled as to why every NY dealer I’ve dealt with uses the method in example 9, lines 1 thru 7. It would benefit the lessee if the dealer avoided the gross up assuming they can do it. And, if they can do it, why wouldn’t they when it’s best for the customer? The dealer isn’t losing anything.
Lastly, I’m not following your argument…
You could run in a continual circle with it, because then there are more finance charges, and each time you increase the capitalized amount, you would essentially have to add more tax too, in an endless loop
What would trigger more finance charges? Once all the costs (doc fee, acq fee, dmv fee, taxes, etc), the finance charges are determined by the adjusted cap (the lease is amortized using the adjusted cap as the initial outstanding lease balance). I’m not seeing where we would add more finance charges once the sell price, capped fees, and cap reduction(s) have been determined.