I’m talking to a Hyundai dealer about an Elantra N lease (surprisingly decent now) and he said that I’ll need to pay tax on not only the monthly payment, but that I need to pay tax on my down payment as well. I’ve never heard of this at all.
Am I missing something??
Why would you not? Do you believe paying for it all up front would mean getting it tax-free?
That’s not what I was suggesting. I’m confused why I have to pay tax against my own money.
But that is what you are suggesting. You are saying that a down payment of the entire amount would be tax free. Why would it change depending on the amount down?
Of course you pay tax on a down payment. We always pay tax on our own money. Hopefully you don’t pay tax on other peoples’ money. That’s their problem to deal with.
They are confusing things. You pay tax on the car and the downpayment reduces the total.
The downpayment itself is not taxed, the car is
Now the monthly payment, that is taxed and taxed separately
That makes more sense. Thanks.
That didn’t make any sense at all.
Great post
Man sometimes some of you folks just dont like to help a person out. You make comments but never address the specific question asked by the OP. Does this provide some form of gratification? What trigger makes answering the question the op asked difficult without snide comments.
You are not paying tax on your own money. What your paying tax on is the full value of the car prior to downpayment. This technically means your paying tax on the all inclusive amount. In other words of the car was 10K and you put down 5K you still pay tax on the 10K. So technically the money your putting down isnt offsetting any tax due. There is at least in Mass (not sure if everywhere) an exception when the downpayment is in form of a tradein. I hope that helps.
I sometimes try to lead the horse to water rather than give it a sippy cup. In my extensive teaching experience, that often nets a better understanding. Nothing snide about it other than what you are reading into it.
wasnt actually referring to you 
This varies significantly by state.
Let’s be specific for a moment…
In monthly tax states, tax is due when the payment is applied… that means that if you make an initial payment (down payment), tax is due at the time of the down payment on the payment amount. When a monthly payment is made, tax on the monthly payment amount is due.
In upfront tax states, tax on either the lease total or vehicle total (depending on state), is due upfront. You either pay all the tax upfront, or the bank pays all the tax upfront and you increase the capitalized cost to cover the tax they paid. In that case, one could look at it as a portion of the amount paid each month and with the downpayment is going to tax, but it really isnt actually differentiated. If capitalized, you’re simply paying a higher depreciation amount for the lease and not directly paying any tax.
Let’s say you go to Ross Dress for Less™ and hit the jackpot.
You find sixteen pairs of Spongebob Squarepants boxer briefs in your size on the clearance rack for $3 each.
Assuming your state collects sales tax on clothing, you’ll pay tax on $48… even if you hand the cashier a $20 bill and put the balance on your Citi® / AAdvantage® Platinum Select® World Elite Mastercard®.
Just here to say, as an Elantra N owner, you absolutely should not lease this. The rates are awful. You’ll do better with competitive credit union finance rates (which is what I did).
Current money factor is around what most APR’s are on a finance. Residual value is 59%. I can lease one for under 400/mo.
This is also helpful, thanks.
I appreciate it. It’s easy to be snide behind a keyboard.
With how much down?
My finance rate was 2.74% and when I bought last month the lease MF was over 5.5%…
I paid MSRP, so assuming that and only normal fees and tax here, this is what mine would’ve been on a lease.
Obviously it’s up to you, just made no sense to me to pay $600+/month to lease this car with only minimum drive offs up front.
Damn, I can’t find that low of a rate anywhere and my credit is in the low 8’s. Everywhere by me is 4+
Use this thread. Gave me a baseline to work with.
Also, most of us here will tell you a big downpayment on a lease is a very bad idea. On a purchase the calculus is different.