Maryland tax Sale price?

Ask the Hackrs
1

Hey Hackers,

I am considering leasing a vehicle instead of buying it for the 1st time.
And I am being told that for Maryland, I have to pay the whole car price, in tax, IE $22,000 price after negotiations x 6% = $1320.

With a 24 month lease, that increases the monthly by $55 !!!

Is that correct? Seems BS to me. The vehicle I was looking at would be around $170/mo before tax or about $4,000.
Shouldn’t I be paying tax on $4,000, not $22,000?

^ That being said, assuming that they ARE telling the truth, I am very close to VA, PA or WV (I live in western MD)
Would leasing a vehicle in one of those states be better for me?

Thanks Hackers.
I’ve enjoyed reading your site so far.

2

Nobody? I’m interested in moving forward, but need help.

Thanks

3

Yes, unfortunately MD levies sales tax on the entire selling price of the car, rather than just the leased portion. It’s the same in VA.

I’m not sure of the tax implications of leasing out-of-state. Usually you pay sales tax based on where the vehicle is registered.

4

I don’t know for sure, but you would not pay any sales tax when you bought the car, but you would have to pay the sales tax when you registered the vehicle in your state.

I bought a vehicle in WV and registered it in VA where I reside. Paid no tax in WV and paid the sales tax in VA at the DMV.

I really wish someone could sway VA to tax leases like most other states.

5

What about if you have a trade-in? Does that lower the amount of the new car that’s going to be taxed in the lease? What if the trade-in has a payoff?

6

You pay tax on the sale price, whatever it is.

7

note the maryland entry