I have a lease with 5 months left. I’m looking to trade it in for a new car that I’d be purchasing. I’m in florida, what amount would I pay sales tax on? I know with owned to owned you pay sales tax in new-trade but I have no idea how that works with lease to owned
They’d be giving me $36,104 towards a lease that apparently has a payoff of 35,000 (ridiculous since I’ve had it for 31 months and the car was 41k with a residual of 29k) I paid $1k down. The new car would be 40,122 without any down payment.
That’s probably the wrong term, here is the sheet. I don’t own the car now, I’d be turning in the lease. I was wondering if if would make sense for me to buy the lease myself and then trade to the dealer si ce my payoff amount is much lower than a dealer payoff amount for some reason but that would be a huge hassle I think. He used ridiculous interest rates of 4.99 and 5.99 percent for the 72 and 84, I’d be surprised if I couldnt get 2.29% or lower with my credit right now. I know navy federal has a 2.29 for 72 month rate right now
I understand that. Whether you trade in a car that you own or lease, a trade in works the same as if you owned it.
Buying out the car now would mean you’d owe sales tax on the purchase price. To this point, you’ve been paying sales tax on the portion you’ve been renting and not the whole amount of the car. The state will want it’s money in full should you purchase it, even if you turn around and sell it the next day. Only way around this is if you have a tax exempt certificate, which the dealer has and you don’t. If your purchase price is significantly different than what the dealer’s payoff would be, I suppose you might be able to save a few bucks in tax doing it the way you suggest. However, it likely wouldn’t be worth the headache. You’d have to do the math yourself to see.
There’s nothing forcing you to take the dealer financing. Shop your loan. The only caveat would be if the incentives are tied to financing through their in-house finance arm vs a 3rd party. In that case, take the in-house financing, see if there’s a pre-payment penalty of the incentive if you refinance (or if you have to stay financed with the captive for so many months to not forfeit the incentive), and refinance then.
I do not believe you get any tax benefit regarding tax on a turned in lease. Oh and by the way, those 5 lease payments will be included in (new) car purchase price!
I’m getting confused lol. The dealer said if I buy a car and turn in my lease, I will pay sales tax on the entire purchase price of the new car (which sucks because like you said I’m paying tax as it is). They are an out of state dealer but the car is currently and new car will be as well registered in florida. The deal isnt terrible for purchase. Even though the dealer payoff is through the roof I’d be shocked if I could find another dealer that would give me 36k for it… I mean hell, my current lease is based off a sale price of like 41k…
I do think leasing again is out of the question, this is the lease they sent me. Seems a terrible deal, especially because I’ll be giving up 3600 of rebate and they tacked on a lease acquisition fee (which they didnt do last time).
It’s always so hard to calculate if a lease is a good deal, because you have to factor in trade in value as well but idk. I’m assuming I can get a loan at 2.29% for 72 from navy federal, so if I put nothing down. And pay the supposedly 3100 in taxes out of pocket it would be 597 a month. My car has only 11,000 miles on it, btw.
This is true. I’m confused as to what you’re confused about. There are only a couple states that give you some sort of tax credit when trading in a car on a new one. Otherwise, you’re going to pay tax on the full purchase price of the new car.
What does this have to do with anything in regard to your tax question? In FL, you pay tax on the monthly rent + depreciation, not the whole value of the car when you lease. On a purchase, you pay tax on the full value of the car upfront when you buy it.
But that wont help me tax wise right? I’d still have to pay tax on the full amount of new purchase. Btw, what the heck is going on. In what world is my charger worth 36k? Is it because the ‘payoff’ is so high that they’re just fudging the numbers?
FWIW, the reason I’m doing an out of state dealer is because in Florida the dealers all have 1,000 dollar dealer fees and none of the challengers (or chargers) have upgraded sound, so this dealer ordered one to my specs. Even though the 1,500 is a shipping fee to me (and I assume to get my car back to them?)
Most states give you a credit actually. Only a handful of states don’t. So in florida, or MA, where I moved from. You only pay tax on the net difference. So if I buy a new car for 40 and trade my old car for 35, I only pay sales tax on the difference. As long as both cars are registered in in the same state. But it seems that with leasing you just kind of get screwed because you’re paying the taxes as part of the payment through the bank so I don’t get any credit for it.
I was talking about future trade in. So like with a purchase used car prices could plummet and I could be screwed on the trade but with a lease I dont have to worry about it since the lowest it goes is the residual, right?
you’re correct…I worded that incorrectly. I was thinking of tax credits upfront that some dealers in some states offer to offset paying tax on the whole cost of the car when leasing, which is not the case here in your situation.
If they’re paying 36k for your car, there’s assuredly a reason behind it, the likely one being you’re getting a better price on your trade in lieu of a good discount on the new car.
Let me break this down for you. If you lease a car in almost every state, you are paying tax on just the depreciation. Therefore, you are not paying sales tax on the entire purchase (like a normal finance/cash purchase) and are not entitled to any trade-in credit for that vehicle. In order for you to qualify for a tax credit on a new finance/cash purchase, you would have to buy the leased vehicle for the payoff and then pay sales tax on that.
Well I’ve paid 1,050 in sales tax then since I’ve paid 15000 in payments so far… idk
Finance is so much more expensive but I dont know what to do.
Assuming I can get the 2.29% interest rate its 597 a month plus 3, 100 in tax (24,588) paid over 36 months vs 20,520 paid over 36 months for the lease. I dont like being in this position where I have to jump through hoops if I want to trade it early. My car is pretty spotless but I also don’t like having to worry about if something happens to it, I have to get it fixed before trading it in and have to have a certain amount of tread on the tires, etc. Also have virtually no equity in the car but if I financed all 40k of the new car I’d also have probably no equity in that either.
