I’m in the process of trading in my leased vehicle and purchasing a new vehicle. I got the final numbers from the dealership and they don’t include any sales tax. The salesman says because they’re buying the leased vehicle for more than what i’m buying the new vehicle for that I get a tax credit and don’t pay any sales tax.
It seems weird to me because I thought you only got a tax credit when going from purchase to purchase. I’m in Georgia by the way so if anyone is familiar with this i’d appreciate the input. Just don’t want to show up and have a surprise waiting for me.
Ok apparently in GA you don’t pay sales tax on a vehicle purchase. Just a one-time TAVT but it is offset if you trade-in a vehicle. Doesn’t say lease or purchase. Just says “trade-in”.
I mean…that’s great news if that’s the case. I was thinking i’d have to shell out $2,000 in taxes.
Did you ever confirm or deny this? I’m in a similar situation in TN, but one dealer says since my trade-in is a lease, you still pay sales tax. Another dealer is telling me if you go from trading a lease to buying a new car, you get the tax advantage.
I’m feeling like I should go with the second dealer, but I’m wondering who’s on the line for the taxes if I sign paperwork with their numbers.
I traded in my lease and went with a purchase. Georgia is a bit different than most states as you don’t pay a sales tax with vehicles. You pay a valorem tax. So I got full credit for my lease trade-in even when going to a purchase. I didn’t pay ANY taxes on my purchase since my trade-in was $37,000 and my vehicle purchase was just over $20k.
Not sure what Tennessee tax laws are like but like I said…Georgia has a unique system set up which allowed me to do this. Saved me about $1,500.
Thanks for the reply. I’ve confirmed with the dealership multiple times that the sales tax is correct even though it’s a lease trade buyout, and they keep saying yes. Other dealerships say the exact opposite, that since it’s a lease and I did not pay sales tax on its full value, then it does not offer advantage for the new purchase. If the former is wrong, I wonder who’s liable after pen hits paper.
That doesn’t sound right…unless it’s just a poorly written tax code.
Are you sure your current car is leased and not in a balloon payment with guaranteed residual (which BMW offered in GA for the past few years)? Because the balloon program looked exactly like a lease, a lot of people that signed up actually believed they were leasing.
Georgia flip flopped on the tax treatment of leased vehicles between 2015 and 2017. (I know because I got burned by the change when moving here). They used to charge tax on the lease payments, changed to charging tax on the full vehicle value, then switched back to charging on the lease payments. If you paid tax on the full vehicle, then I can understand getting a tax credit now against the purchase.
It’s also possible that the tax flip flop resulted in a tax loophole.
I’m curious if anyone knows for certain as this can represent pretty significant savings.
I don’t know that it created a “loophole” but the new ad valorem tax for vehicles treats purchases and leases the same way.
Interesting enough, my vehicle wasn’t even registered in Georgia. Had out of state tags and everything! The trade-in value was still applied and a credit was given.
@nycsimone Sorry to revive this old thread. Currently going through the same thing here in GA. I had both cases happen to me: Dealer 1 provides no benefit, and Dealer 2 provided trade-in benefit.
In your case, did it have anything to do with either having positive equity in your car or anything else? Did you ever get a tax bill from the state if they did so incorrectly?
I ended up buying a GMC Terrain because they were giving them away. Ended up paying $20,500 for a vehicle that has a MSRP over $30,000. Had that vehicle for 6 months and just traded it in for a Jeep Cherokee and got $21,000 trade allowance for the GMC Terrain. LOL! It just wasn’t that nice of a vehicle…very basic. The Jeep Cherokee is a nice upgrade.
