Tax on rebates?

[yana90]

Northern California CA

Hi,
One of the dealers told me that we also have to pay taxes on the rebates. Is that right?
Eg on Hyundai Ioniq5, the rebate may be 14500.
Considering 10.25% tax in NorCal, does that mean I have to 1450 on taxes alone? And these taxes are on top of the taxes on monthly payments?

Having a hard time seeing how leasing makes sense here vs buying, esp if we want a short-term lease.

I thought we only pay taxes and interest on the depreciation cost.

Thanks!

[yana90]

saw another post where they talk about double taxation in CA

California Double Taxes? - Zero Drive Off / Capitalized Taxes on Lease

If I understand the question: if you capitalize the upfront taxes and fees, you are paying a rent charge on that borrowed money in CA, the tax is on the lease payments By virtue of the payment being larger when you roll everything in, you are paying more tax yes (not double-tax per-se, but tax on the additional rent) I saw you liked an old example I gave: You’re effectively asking about the $1.64 here, yes?

I guess they are saying we should not roll in the taxes and other fees into the monthly payments to avoid extra taxes.
Is that understanding correct?

[trism]

California taxes rebates. More states do than do not.

[paranoidgarliclover]

@yana90

Having a hard time seeing how leasing makes sense here vs buying, esp if we want a short-term lease.

Do the math on an Ioniq 5 “short term” lease (however you want to define that) and on your total cost, should buy (and then try to sell) an Ioniq 5. The poor resale value for most EVs means that it makes much more sense to lease one.

It makes even MORE sense when you price one relative to a comparable ICE car (leasing).

[yana90]

So the taxes are on

1. Rebates
2. (Cap cost - residual)

right? Is there anything else taxed?

[Jon]

@yana90

(Cap cost - residual)

You are not taxed on the depreciation like that.

You are taxed on any rebates, cap cost reduction AND the monthly payment.

These taxes are very common in many states and not as harsh as states that tax the selling price.

[mllcb42]

CA taxes on payments made at the time theyre made.

So upfront payments made via incentives get taxed upfront when the payments are made. Upfront payment made via down payments get taxed upfront when the payments are made. Monthly payments get taxed monthly when the payments are made.