I live in Texas. My daughter, who is also a Texas resident, is a junior in college in Ohio. I want to lease a car for her in Ohio.
If the car enters Texas, we would have to pay the sales tax (6.25%) on full value of the car, minus any sales taxes already paid to Ohio. (Source: Motor Vehicle Tax Guide)
If the car stays in Ohio, would I only be paying the Ohio tax?
I assume all lease incentives apply due to Texas residency?
Title will be in lease company’s name, so titled in Ohio as well?
I assume registration and plates will still be Texas? In this case, when I go to register, I tell them that the car is out of state and I don’t have to pay taxes to complete the registration?
Yes, a Kia dealer did that for me as part of my last lease deal. I think my effective tax rate was only about 0.5%. However, wouldn’t I need to buy the car in Texas and drive it to Ohio in order to do this? That would burn through >1,200 miles of the lease just one-way. Or are you saying that an Ohio dealer may be able to provide this same TX credit?
This is almost a straw deal, and the tax evasion aspect will make it look even more like a straw deal.
If daughter has Ohio residency, she should lease in Ohio and you cosign. If she is still a Texas resident, you aren’t likely to avoid TX tax on a lease (short of tax credits).
Geographic incentives depend on the brand. Some follow the customer and some follow the dealership.
Can’t you lease a car and register it in a different state than your DL state?
I don’t have multiple homes in different states, but I’m guessing those who do register it in those states with an in-state residence address? Since their DL can only be for one state?
Yes if they can provide other proof of address when stipped that would demonstrate it’s for OP. And provided they read and understand the assignment clause in the lease contract they sign to ensure they aren’t violating it.
Texas specifically says that sales tax is exempt if car is not used in Texas. Just being a Texas resident does not mandate Texas registration. There are exemption forms and they describe how to get certificate of title in Texas if the other state requires it. It’s not a tax evasion scheme.
The caveat is that the TX Comptroller website said not to register it in Texas and never bring it into Texas.
So the answer may be that I just need to register the car in Ohio. Being a Texas resident, I’m not sure how that works. We can use her college address but all of our ID’s are Texas. I guess I need to track down Ohio registration laws.
I buy the car in Ohio and pay Ohio taxes.
I also register the car in Ohio. This does not require an Ohio license, but it does require proof of Ohio address. This can be school transcript, letter from the school, paycheck stub from a job, or W-2 from an Ohio job. I just don’t know how the dealership handles this. They might make me go to BMV to pay the taxes.
Texas is out of the picture as long as it’s an Ohio car.
Thanks for everyone’s help!
The Ohio resident with proof of address can lease in Ohio and should do the BMV processing.
That was my recollection but I haven’t lived or leased there since 2013.
The BMV is an experience that is hard to describe to non-residents. I’ve stood in line in some kooky state DMVs and a few AAA offices and brokers, but I wasn’t psychologically prepared to pass a written test and swap 2 state drivers license at a former strip mall jewelry store staffed by volunteer Rotarians and Knights of Columbus.
Ohio requires Ohio driver’s license for vehicle registration
The Ohio BMV website says that registration requires:
Ohio title
Ohio Drivers License, Ohio ID card, OR Social Security card.
Documents from an approved list that prove name, birth date, legal US presence, social security number, and an Ohio address.
In other words, it looks like you don’t even need a driver’s license from anywhere to register a vehicle in Ohio. However, you have to have an address there.
In order to get the Ohio title, it won’t matter for a lease since the title is in the name of the leasing company. However, just FYI, getting an Ohio title doesn’t require a driver’s license either. You only need one of the following forms of ID (per Franklin county Clerk of Courts):
You’re better off having your daughter switch to an Ohio Driver’s License and then getting the vehicle from there than jumping through all these hoops with BMV speaking from personal experience. You can co-sign for her lease.
You also can’t vote in Ohio with an out of state license. Need a military ID or passport.
I plan on co-signing the lease since she’s the only one who can register it. The problem with her getting an Ohio license is that she would need her own car insurance policy.
Just for clarification here, out of state college students do not require their own insurance. They would still be covered on their parent’s policy as long as they are listed on that policy.
I already had my insurance company (USAA) confirm this.
Right but you’d need to register TX to keep it under your insurance. Doubt you can register in OH and have it under your insurance. Registration and insurance address should match.
