Taxes on car when moving

What if the reverse happens? I mean you leased in one state and are moving to one that taxes upfront. I am in this situation with a new lease and will be moving soon.

No point talking in generalities when there are 50*49 possible combinations of reciprocity agreements (or lack thereof)

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Fair point. MO->MD

In this case, would I not receive a refund on the taxes I paid to NJ?

Google it. For example NY will not refund anything for moving out.

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That sucks if you have to pay double taxation for a lease. I would say this can be a major negative for a lease.

If the payment is low enough vs financing you can still come out ahead.

You would need to check with the DMV but I’d guess you come out ahead either way versus leasing entirely in MD. They either only tax the lease payments or they tax the value of your car when you register it using it’s used value rather than sales price.

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Call the state. As @max_g says NY will keep it. Can’t say what NJ does.
@AP919…do you know?

For the sake of the forum I was able to find this for MD. So as others have said before, search the new states DMV website and you should find the answer. Or call them.

"For a leased vehicle:

  • Lease agreement and proof of monthly lease payments (leased vehicles only) – If you have paid or are paying excise tax to another state through your lease payments, documentation is needed to determine the amount of excise tax credit you may receive."

This was on the NJ DMV refund pdf form.
":black_small_square: Sales tax refunds are only handled by: NJ Division of Taxation, 50 Barrack Street, Trenton, NJ 08646 The division can be contacted at (609) 292-6400. "

So it looks like they do refunds. I am waiting on my cali registration to be finished next week, and will report back in a few weeks on what NJ says/does. Fingers crossed.

This doesn’t really answer the question. What is the tax credit going against? Are you getting credit for excise tax paid against tax you owe on the purchase price for car? Against tax owed for used value of car etc…?

Either way, it is probably complicated and people at the DMV will be confused.

Good luck. I’d be surprised if NJ gave up the money without a fight but it’s worth a try. Keep us updated.

Sorry, I was out with my family last night and saw this when I got home, exhausted, and it’s been go, go, go today.

Generally speaking, when you have paid taxes up-front, you need to show proof that the taxes were paid. You should have something from the dealer that shows you paid the tax. If you don’t, then you’re definitely paying again.

The “bad” news for you, is that even though you paid tax in NJ, the sales tax in CA is significantly higher. The base rate is 7.25%, and I’d venture to guess that you live in a county that imposes more sales tax.

CA will provide a credit for out-of-state purchases, but the key here is “timely”:

A lessor who leases property substantially in the same form as acquired and who has paid retail sales or use tax, or reimbursement therefor, on such property, imposed by another state or D.C. before leasing, property in-state may credit the payment against any use tax imposed on the property because of such lease. To be entitled to credit, the lessor must make a timely election to measure any tax liability for property by the purchase price, unless the out-of-state tax equals or exceeds the California tax. If such out-of-state tax equals or exceeds the tax imposed by California, the lessor will be deemed to have made a timely election and the rental receipts will not be subject to tax, if the property is leased in substantially same form as acquired. The rule does not apply if: (1) the election is not made timely; (2) and in case of taxes measured by periodic payments under the lease, to the extent the taxes imposed by the other state, or D.C. were also measured in the same manner under the prior lease. [Cal. Rev. & Tax. Cd. §6406; Cal. Code Regs. 18 §1660©(8).]

This means that if you move from a state that taxes the payments, e.g. Florida, you will definitely pay whatever CA tax is due, since it wasn’t paid up-front. However, the tax you paid in NJ is almost certainly less than what would be due on CA. They will take the payment, e.g. $400 per month, calculate the tax, i.e. 9%, over 36 months. In this example, it’s $1,296. Say the depreciation is more than that $14,400, especially with any cap cost reduction, taxable rebates, etc. Let’s call the taxable amount in NJ $15,400 ($1,000 more than the sum of 36 payments at $400). I’m also including luxury tax, since a QX60 is almost certainly more than $45,000. That would make the tax paid in NJ $1,024. You would still owe $272 to CA on the remaining payments, so they would likely just divide it by the remaining term. If there are 24 months left, it’s $11.33 per month added to the payment.

Further, it depends on when you bought the car. Did you buy it less than 12 months ago? If so, this applies:
Vehicles purchased out-of-state—12-month test: A vehicle not used in interstate or foreign commerce and brought into CA within 12 months after its out-of-state purchase is rebuttably presumed to be acquired for in-state consumption, applicable under any of the following circumstances: (3) the vehicle is used or stored in-state more than half the time during the first 12 months of ownership, when purchased by a nonresident of California. [Cal. Rev. & Tax. Cd. §6248(a); Cal. Code Regs. 18 §1620(b)(5)(A).]

BUT
The presumption may be overcome by documentary evidence that the vehicle was purchased for use out-of-state during the first 12 months of ownership. That evidence may include, but is not limited to, evidence of registration with the proper authority outside the state. [Cal. Rev. & Tax. Cd. §6248(b); Cal. Code Regs. 18 §1620(b)(5)(B).] Evidence may also include whether the purchaser had a residence out-of-state; the location that the vehicle was insured for; the amount of time the vehicle was in California; and whether the purchaser’s move to California was voluntary or involuntary.

This appears to be the form to use: http://www.cdtfa.ca.gov/formspubs/cdtfa447.pdf

You can also see pages 6 and 7 here: http://www.boe.ca.gov/pdf/pub52.pdf.

So yes, NJ will keep the tax, but CA will provide a credit, provided certain provisions are met. However, you will almost certainly still owe use tax, due to rate differences.

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A simple yes or no would’ve sufficed :).

J/K, great write up!

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It all depends on the state. how long you’ve had the car, etc. Sometimes, depending on the leasing company, it can be nearly impossible to unwind tax baked into a payment.

For instance, Ford includes MA excise (property) tax in your payment. When I took my Fusion out of state to here in NY, Ford refused to unwind it and it was a HUGE battle. There was no way I should be paying an annually assessed tax when the car was no longer in that state, and no one seemed to understand that or do anything about it.

Yeah, and then OP asks me to explain, so I may as well get it all out there!

But as usual, the answer is “it depends,” and it’s more like a “yes, but.” :wink:

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Don’t forget your disclaimer!

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Nothing I have written herein is to be construed as tax or legal advice.

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Thank you brother . That was a great write up. Lot of helpful information there. I also just looked into the pdf form and I’m not sure if that ones the right one for me. It seems that one is more for Cali residents who are purchasing/leasing cars to be used out of state. That form looks like it’s geared more for a cali resident who wants to use a car solely out of state, and avoid paying cali in-state taxes on a vehicle that will only be used out of state.

Thank you again for taking the time for the extensive write up. I’m sure it’ll help a lot of people here

Edit:

Spoke with NJ division of taxation and you need to fill out form A3730 if you are in my situation. I confirmed that it’s the correct form to use despite it stating business refund on the form. I was advised to send in a copy of the contract indicating how much sales tax was paid upfront, and copy of the new state (cali) registration , as proof. Was not given a time frame as to when refund would be processed and returned. Will update at some point in 8 months if I hear back lol.

Did you hear back from them?