I recently moved to Texas from another state. I received a ‘Lessee’s Affidavit for Motor Vehicle Use Other Than Production Of Income’ document from BMW. Basically, if the lease is for personal use, I don’t have to pay sales tax. - All good.
My question: Do new leases from Texas also qualify for this tax exemption? The document’s ‘Important Information’ section specifics that the Tax Code Section 11.252 exempts tax on personal use leases, and doesn’t mention any exclusions.
Is this the same as the Texas tax credits offered when signing a new lease in Texas? (I’ve seen a few listings with Texas Tax credits on leasehackr) If so, then shouldn’t the tax credit be available on all leases, as opposed to only on certain models?
This has to do with PROPERTY not sales taxes. Usually this is part of a package of documents you have to sign when leasing a car in state. I recently discovered after leasing out of state (I am a resident) you still need to provide this affidavit with the only headache being you need to get it notarized.
If you leased/registered your car out of state and then moved into TX, I believe you are free from further sales tax for the duration. But you will discover when you go to lease your next car as a TX resident that you are now subject to the painful upfront 6.25% sales tax on the full selling price of the car which so many people (rightfully) bitch about on this forum. This is one of the trade offs for a state with no income tax–there truly is no free lunch.
Right, I just meant you don’t have a sales tax levied on the payment going forward. That $95 or so is usually collected when you register in state. Also there are the usual annual inspection/registration fees as with anywhere.
I’m mainly being pedantic because we have a forum member that likes to insist that vehicles transferred into texas are required to pay the 6.25% tax rather than the $95 tax no matter what, despite the tax code clearly not saying that.
BTW OP, the tax credits you referenced are something else. Technically the 6.25% sales tax is imposed on the lessor (the financing company) but it is passed through to the end user, the lessee. Sometimes dealer will have credits/incentives to effectively reduce that 6.25% to somewhere around 1 or 1.5% which can be a significant savings when you are looking at the total lease cost. But these are only available sometimes, and usually on vehicles in inventory the dealer is trying to move. Good deal if you can get it.
Other than that, can we please stop calling them “tax credits?” We know they’re not, and it’s really a reduction in the tax rate due to BMWFS being able to place a “trade” on the deal, essentially. This probably bothers @asfarr86 and me more than it does other people (or maybe just me, hah), but that also hast to deal with the line or work we’re both in day-to-day.
Sec. 152.023. TAX ON MOTOR VEHICLE BROUGHT INTO STATE BY NEW TEXAS RESIDENT. (a) A use tax is imposed on a new resident of this state who brings into this state a motor vehicle:
(1) that has been registered previously in the new resident’s name in any other state or foreign country; or
(2) that the person leased in another state or foreign country.
(b) Except as provided by Subsection (b-1), the tax is $90 for each vehicle.
(b-1) The tax on a motor vehicle eligible to be issued exhibition vehicle specialty license plates under Section 504.502, Transportation Code, is equal to the lesser of $90 or 6.25 percent of the total consideration.
The tax imposed by this section is in lieu of the tax imposed by Section 152.022.
152.022 being the section describing the 6.25% tax due on a vehicle brought in from out of state by a resident.
Another question on the reduction in the tax rate (def not tax credits) - is this eligible for personal lease (if you can find the deal), as opposed to eligible only for business owners?
Texas can technically still zing someone for use tax, among other things. Sales and use tax, though collectively described together more often than not, are very different things.
Texas could also say that you don’t meet this:
Or there are times it looks like someone clearly bought a vehicle and then immediately brings it in to Texas as a new resident, but there wasn’t really more than a few weeks between when it was registered elsewhere and they’ll slap someone with the total tax.
It’s not as cut and dry as it is in just one statute.
I can see how they’d try to call party foul one someone that went and leased a car on their way to move to Texas as a way around taxes, but how often do they actually claim people with clearly established new residency aren’t new residents? Are we talking an actual issue here or some weird corner cases that happened once or twice?
