Hello leasehackrs, im currently living in philadelphia (which collected taxes 11% on a monthly bases) and about to lease a car here but in a couple of months i m planning on moving to virginia( whcih collects sale taxes upfront on the car sale price) , my question is how does the sales tax payments work?
1- is it easy to switch taxed between states and does the dealership changes the contract based on that?
2- am i expected to pay the upfront sales tax as soon as i register the car in VA although it would be 2 months old car
what’s the correct choice here and should i just postpone leasing until i move to virginia,
VA DMV form SUT3 (purchaser’s statement of tax exemption) has this as an exemption from paying sales tax:
Being registered for the first time in the Commonwealth and the applicant holds a valid, assignable title or registration issued to him by
another state or a branch of the United States Armed Forces and (i) has owned the vehicle for longer than 12 months or (ii) has owned the
vehicle for less than 12 months and provides evidence of a sales tax paid to another state. However, when a vehicle has been purchased by
the applicant within the last 12 months and the applicant is unable to provide evidence of a sales tax paid to another state, the applicant shall
pay the Virginia sales tax based on the fair market value of the vehicle at the time of registration in Virginia;
However, I don’t know if the monthly lease tax would count as sales tax paid. I’ve heard that the VA DMV is very helpful on Twitter- you might try messaging them there.
I think it would definitely be easier to just wait until you move, but that might not be great based on where the market will be in two months.
You may be already aware of the Alexandria personal property tax- I think it’s ~5% of assessed value annually, but there’s some funky state subsidy on the first $20k of assessed value.
The lessor AKA the bank will change your payment based on moving and tax changes. You’ll have to call them or change your address online with them. They should also be able to tell you what docs to take to the DMV to get your new plates. The dealership has no ongoing involvement with your lease once it’s signed and delivered.
I don’t see any upside to waiting until you move. You’d definitely pay sales tax on the entire selling price then. Leasing before you move seems to give you a possibility of being exempt from sales tax in VA.
Depends on exact details but I don’t think it’s worth the hassle to buy car in philly. Virginia car tax is only 4.15% on total purchase price while he will be paying 11% on monthly payments in Philly. On a unicorn the Philly tax is obviously better but in this economic climate I’m guessing the total sales tax bill will not be substantially different whether he leases in PA or VA.
Now for @becker the real issue is everyone here is answering the question you asked but we are all talking at the margins when the real issue with Virginia taxes is the annual personal property tax which is levied by the county or city you reside in regardless of where you buy the car or whether you are paying VA or PA sales tax. Mandatory taxes are lower in VA than MD or DC but if you want a nice car it’s pay to play. You can estimate annual taxes using the website below (you say Alexandria so that the link I included but keep in mind some Alexandria addresses are actually in Fairfax county). Depending on value of car, the local annual car taxes will be 2-3.5 times as much as sales tax during life of lease.
I’m assuming he either pays 4.15% on total sales price or 11% on lease payments. If he could avoid all tax on the car that would obviously be beneficial but that seems unlikely. I don’t think the VA DMV will accept paying two months worth of lease payments+tax to Pennsylvania as sufficient since they know as soon as you move to virginia you will stop paying those monthly payments. But who knows it is possible. More likely he then has to pay tax on fair market value of car based in the language ian_man posted above.
