NJ Luxury Tax Not Paid on Demos/Loaners?

Ask the Hackrs
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I sent a request over to a BMW dealer in NJ for a demo X3. It was very detailed with everything I was looking for in terms of numbers. The salesman called me back first saying that he couldn’t come near my attempted hack, then corrected my tax number. He said the NJ 0.4% luxury tax on vehicles isn’t paid on demos since it was already paid when new so my tax rate should be 6.625% not the 7.025% I had been using to calculate deals.

Anyone have any experience with taxation in NJ for demo/loaner leases? It doesn’t make too big of a difference and I’m sure he’s technically correct but I’m also assuming most dealers still try to pass it to lessees anyway. Let me know your thoughts. Thanks.

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Just my 2 cents I was negotiating a 530 and the dealer told me that I would have to pay the luxury tax even if it was a loaner

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NJ tax is always 6.625% of total payments.

The luxury tax is 0.4% of the selling price if above $45,000 or MPG below 19

Maybe your SP is <$45,000

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What Max said. If a loaner, your selling price is likely below the threshold.

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Good point. However this one was for an M40i with a $64k MSRP marked down to $57k and he specifically said that it’s not applicable to loaners because it had already been paid when the car was new. Just wanted to see if people were being charged 7.025% on their deal sheets or 6.625%. Thanks for the feedback.

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Hadn’t heard that before. Would be good to know if true, although it would be a small overall difference.

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For NJ registration purposes. Once the car is on a title (NJ or otherwise), it’s used and no lux / fuel inefficient vehicle surcharge is due. The tax only applies to vehicles sold on a CofO / MSO (basically the birth certificate from the manufacturer).

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Thanks Mort, could be useful in negotiations to get that last couple hundred off the price.