You realize you’ll pay both sales and property tax right?
That has nothing to do with sales tax. It’s to prevent you from paying a personal property tax. I fill it out every time I lease a vehicle in TX.
If paying sales tax wasn’t the norm, you wouldn’t have done it with your previous leases.
Good tip!!
As someone who has leased cars for 20 years in Texas, the law is very deceptive because the State collects sales tax on the lease for the entire value of the vehicle and then when it is turned back to the company, they receive a tax credit for use on other sales from the state. EX. I lease a 30K vehicle and pay $1800 in sales tax as the lessee. The manufacturer received a credit of the value of the car turned back to them. If it is worth 15K, they get $900 back. If I were to buy out the lease, I need to pay the full value of the buyout again and I do not get the credit. Two lessons from my post.
One. The manufacturers give dealers tax credits. I have received them from Honda, Toyota, Nissan and Acura. I often lease with Zero sales tax due. They are not easily found. You have to call dealerships. Sometimes they are advertised as a tax credit or a no sales tax lease. I have some contacts I use to ask.
Two. One day, a plaintiffs’ lawyer will sue the manufacturers who get you to pay the sales tax of 6% on the entire lease value but they apply their credit to your car and therefore pocket your sales tax. How often does this happen? We do not know. Does it, yes. I bet the dealership puts some paper in front of you saying you are assigning all credits to them. But it is a misrepresentation.
I have called the dealers lobby groups to see if they would support changing Texas law on sales tax on the entire car value and they said no. I was willing to do the work for them for free showing other states who got it done.
If you buy out, you only pay sales tax on the contracted residual or if offered a reduced buyout then you are taxed on that.
Maryland does something similar to what you were describing, but because of it there is no avenue in which the bank is able to offer a lender tax credit.
So you pay 6.25% on selling price at time of lease and 6.25% on residual if you buy it out?
Yes. Which is why you want to get sales tax credits on the 1st lease in case you buy it out in Texas. Its an odd Texas thing
When do dealers typically offer a reduced buyout? Just curious if I’m able to negotiate the RV when it comes to turn in.
It’s a lender thing, Usually when post-lease auction values are far below the residual. 
I was unaware of all these taxes in Texas. Seems… well, it doesn’t matter what it seems compared to other states. It is what it is.
I know this is a older thread but both my ex-wife and I got a “Misc” charge of a little more than $1,000 for our up coming December Lease payment with Mazda Financial Services (MFS) for our leased cars from Mazda Austin South. We got our cars within a day of each other, CX-90 PHEVs. Our cars are registered in Hays County.
When we called MFS, they told us both the “MISC” charged was for Property Taxes due but we aren’t suppose to have Property Tax on leased cars (I had a Ford Lease and never had a “Property Tax” due). After pushing the rep on the call, they confirmed (for both of us) they did have on file our Form 50-285, Lessee’s Affidavit but the tax bill showed the cars listed as “business”. They then told us, we’ll have to get back to you in 7 to 10 business days after they “research” our complaint. Actually for me I had to call twice and ask if they had my Form 50-285 on file, since the 1st rep was unhelpful and said it was either my problem or the dealer’s.
I also got a message from our Hays County Tax office when I queried them about who/when and how many times on the Form 50-285, Lessee’s Affidavit.
Good morning Richard,
A property Tax for leased vehicles is billed through us based on the data we receive from the Central Appraisal District. The leasing company (MFS) is the party that would provide any applicable documents such as a personal usage affidavit to the CAD when they render their personal property tax. Yes, this should be sent every year that they maintain this lease. This does not typically come from the dealer or the Leasee.
I hope the above helps, it seems to me MFS dropped the ball and they had better eat this charge and get the paper work in for the next two years!
Something similar happened to me a few years ago on a BMW lease. I called the dealer, and they reached out to BMWFS. The form I signed just didn’t get sent to the tax office by mistake. It was rectified with no issue.
Mazda Austin South has yet to call either me or my ex-wife back. Its a bit comical that the Hays County Tax Office is faster in replying than the dealership were two CX-90 PHEVs were leased in a 24 hour period (not to mention other new & used cars bought there in the past 20 years).
Since it’s crickets from the dealer, did you contact MFS to see if they have a copy of the form you signed?
I did, 1st call I made I was told, more or less, it was either my issue or the dealership. After my Ex told me MFS said they had her affidavit I called again. The 2nd rep found my affidavit too, then said it would be 7 to 10 days for them to “research” before getting back to me.
After hearing from Hays Tax office, I am certain this is MFS f*ck up and they had better eat it. Since I am sure Hays county is likely not to care because they missed the deadline to submit the affidavit.
my take (add grain of salt):
F&I once indicated that you will be hit with property tax bill if lease is for business use. You may have signed affidavit affirming not to use for ride sharing or revenue generating purposes.
I was trying to be smart ass and leased my first GX under business, hoping to avoid liability appearing on personal credit report and 179’ed it. Not only it failed, I was hit with property tax bill of $1400+ yearly. However it magically went away that I do not want to spill out here in open.
It can probably be filed retroactively and get taken care of. I’d give them a little time.
Bit of a typo on my 1st post, I typed out the Lessee’s Affidavit was filled out as “business” and I meant to type “not business”.
As for them getting it taken care of, I would surely hope so. I personally don’t care if they can get it taken care of retroactively - I am not paying even if I have to take them to small claims court. If they missed filing two leases, makes me wonder how many more they messed up?
Yes, it’s best to think about things in Texas this way. It doesn’t matter how bad things are or if something is done better elsewhere, people will argue the Texas way is the best way until they’re blue in the face.
Been down here 36 years and there are a number of things I’ve never made my peace with, chief among them being the weather. I am a wet side Pacific Northwest native. It is what it is, is the best way to put it. I’m effectively stuck down here so it’s best to find ways to deal with it.