Sorry if this is a dumb question, I’m a foreigner (UK), so the US tax system is still completely baffling and something I normally leave up to the wife to sort out!
I’ve just logged into my Volvo account and suddenly seen a charge for circa $2k in ‘Property tax’.
Is it normal for this to be charged outside of the payment, I’ve looked at my lease agreement and it states a Base monthly payment and then a ‘Monthly Use Tax’, which works out the same as the MA state tax on the Base Payment.
Is the Property tax, some kind of other Excise tax I’m being charged and if so, is there any reason it can’t be rolled into the payment?
Also for future reference is there anyway of working out what this tax may amount to? And what does it compare to if buying the car.
Its not surprising the dealer did not mention it, if they don’t have to, its obv something you need to consider when working out the full cost of the lease term.
MA property tax is based on value of the car and would be the same whether you owned or leased the car. It drops down over the first 5 years and then levels out at a lower amount after that. It’s not as straight forward to calculate as sales tax which is think why few banks build it into the lease payment.
The excise tax is based on the valuation of the car. It’s always the highest the first model year, and goes down significantly thereafter. If you owned the car, youd still pay it…but would have to pay the entire amount due upon getting bill. As a lease, you should be allowed to pay it back in interest free chunks over the year. So split it up in manageable amounts. Welcome to the joys of “Taxachusetts”
Couple things. 1. I’d guess this guy is driving a XC90T8 since you would need a MSRP around 90k to get a 2k bill from Massachusetts in year one of lease. I get leasehackrs can get great deals on super expensive cars but for politicians not knowing about leasehacking, sticking someone driving a 90k car with a 2k tax bill doesn’t seem terrible.
Also Massachusetts tax burden is middle of pack (19th). I certainly haven’t lived anywhere with lower taxes since leaving Massachusetts.
Something else to consider when I’m trying to work out the actual cost of a lease over x years.
At least I know my final year is only gonna be charged at 40% so I shouldn’t be looking at another whole grand!
I guess it’s not something that is additionally disadvantageous over buying, at least over buying brand new, I’m deffo considering moving to New Hampshire though!
I lived in NH before moving to MA, NO excise taxes. But they get you with high property taxes and the cost of registration each year is dependent on car value. So it really doesn’t matter which side of the border you’re on… Lol
Taxes are middle of the pack, agreed… But they have different ways of charging residents money which can suck. The terrible traffic situation & all these taxes are making me willing to relocate.
I have a bunch of friends in the tech community (wish I had learned to code instead of law school but c’est la vie) who are in such demand they can easily get a great paying job anywhere. They frequently debate where the best place to work is re cost of living and taxes but not being somewhere without urban amenities…there is a reason Amazon selected DC and NY for HQ2 rather than Columbus and Oklahoma City.
Most conclude Washington State is the best option. Lack of state income tax, especially in limited SALT deduction environment makes big difference. But after Washington State, MA is about the best. Taxes are much higher in NYC, DC, Illinois and California. Places like MA and Virginia seems terrible because of the annual car tax which isn’t automatically withheld like income tax.
As an aside, I hate the car tax from policy grounds. It’s super regressive, hard to enforce and usually environmentally unfriendly.
I will say… I don’t mind the property tax and understand its purpose. But for super short-term leases that just so happen to cross calendar years, it is a bureaucratic nightmare. Just got the pro-rated 2023 property tax bill via Audi Financial for a Q4 I leased in August 2023 and traded in in January 2024.
So when the 2024 bill comes, going to have to coordinate with AFS to do the abatement…
