not sure if this is the right place to ask but, i’m about to trade in my vehicle and get another one…
my current vehice is leased, wil i be eligible for a tax credit? state of FL
thing is, i spoke to two dealers, 1 said yes, 1 said no.
Do the deal at the dealer that said yes…
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are you going to lease another one or are you purchasing the new one?
Edit, wrong tax credit.
haha yea, thats ideal… but i dont want an issue when the car arrives.
@trevor90 , so yes , if you are purchasing a vehicle, you would receive the tax credits, assuming the dealership is BUYING the vehicle from your leasing company and not just grounding the vehicle and returning it to the dealer. You would want to get that clarification with the dealer
Wouldn’t that require tax to have been paid? If the dealer is buying the vehicle directly from the lessor, then no tax has been pain on the buy out amount.
If the OP was trading in a vehicle that was owned, rather than leased, then the tax credit would be a result of tax already paid.
yeah, the dealership is 100% buying it and reselling it on their lot. Thank you for the clarification!
fwiw, a broker bought out two of my prior leases and did not pay tax. a dealer buyout is different than a regular person buying it out.
@mllcb42 - if I am understanding the dealer is taking the car in trade, so OP is not buying it out personally, so shouldn’t be any tax from OP
I haven’t encountered a lease trade in, but i would say that it would be still be the same if the car is financed since there is a payoff and Captiv holds the title.
The captive holds the title as a lien, but the ownership (and taxes paid) is to the consumer. In the lease, the captive holds the title as the owner and no taxes have been paid though.
When you finance the vehicle, all the sales tax is paid up front (it can be amortized, but still gets paid to the state up front. When you trade it in in a state that allows trade in credits, you’re getting credit for the taxes already paid on the value of the vehicle.
If the lease is taxed monthly, the trade in value is never taxed, so there isn’t a taxes paid to credit against. I wouldn’t expect there to be any tax credit applied.
Now, that’s not to say that the system isn’t screwy and is aware enough to factor that in, but my expectation would be that it wouldn’t work. I haven’t actually tried in FL to trade in a lease on a purchase to see what actually happens.
The mixed reports from the dealers doesn’t surprise me. I suspect the one saying “no” is correct and the one saying “yes” is missing the nuance of it being a leased vehicle that’s being traded in, but I could be wrong. I’m purely speculating based off of the intent of the trade in credit.
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Great point you bring up there. Since in FL, you pay monthly sales tax on the lease, that totally makes sense now. Was not thinking that at all, well done sir!!!
@trevor90 - he has a very solid point there, but as he says, we do not know for sure. I would look at market value on your vehicle and compare it to your trade value… so if there is equity past the 7% sales tax of the pay-off, it could be something worth looking at.
the dealer is paying me 20k more than my buyout from Ally.
The vehicle’s pay off is 200k, dealer willing to pay 220k
If the dealer is buying it out, what is their buyout price from Ally? It won’t necessarily be the same as your buyout price.
@Jon i dont know the dealer buyout price (because it would be minus taxes from regular consumer buyout) but does that matter? Numbers wise i assume yes, but in the grand scheme of things i guess it doesn’t look like i wil get a tax credit.
That is not true. The dealer buyout price can be whatever Ally sets it at. If it’s over $220k, then you have no positive equity.
@Jon it is not over 220, the dealer called Ally, and the pay off was 200,xxx… they offered me 220k. I would be rolling the equity into the new car.