That’s called an early Christmas present
In your lease deal with the jeep, more than likely you had equity when the dealer bought it out that was returned to you by the dealer
Naw. There was negative equity actually. But either way I dont beleive I’m getting any break in taxable amount with my vroom deal.
In texas you do not get Tax credits on a leased vehicle… If a dealership screws up and does (seen it happen before) they get a chargeback later on down the road…
You can get Tax Credits in Texas when the Leasing company offers them (ex. Instead of paying 6.25% you pay 1.25% + L&M Fee)
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You do get some tax credit relief when trading in an owned vehicle for the difference between trade and sale price of new vehicle lease or buy.
$10,000 difference is a savings of $625 in tax.
When a car is leased in Texas, the lessee must pay the sales tax on the entire car, 10,000 - $625 or so. When you turn it back, the lessor gets back as a credit for future sales tax payments, the tax on the FMV of the car. $5000 value gets back half the sales tax paid. That lessor can use it for future purchases. Honda has tax credit leases all of the time. I get mine from Brad P at Howdy in Austin. It is a sweet deal. I have also gotten them from Champion Acura Gulf Freeway in Houston. Sometimes they make the entire lease tax free. Sometimes, it is a part. It is a hidden system rarely advertise that they use for tier 1 credit customers who lease cars needing to move. It is never available on newly introduced cars. Ask and press and you can get them. I assume most car companies get a tax from a customer, and use the credit and pocket the tax equivalent. And, they have some clause in the papers you sign that lets them use credits and holdbacks any way they wish.
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Sorry to bring up and old post here, but I’ve been wringing my brain about this one for a minute. I recently moved to Texas, but the daunting task of searching for a car here has me looking elsewhere. I’m currently still a licensed resident of GA, and haven’t yet registered my current vehicles in Texas (neither of which would apply to registration tax because of the rate paid on one, and the age 25+ of the other).
I’m wondering if this applies to me:
The State of Texas imposes a motor vehicle sales and use tax of 6.25% of the purchase price on new vehicles and 80% of the Standard Presumptive Value (non-dealer sales) of used vehicles. New Texas residents pay a flat $90.00 tax on each vehicle, whether leased or owned when they establish a Texas residence. The only requirement for this tax to apply is that the vehicle must have been registered in the name of the owner in another state. The cost of a new title is $28.00. If the vehicle is currently registered there is a $2.50 charge to transfer the registration to the new owner. If the vehicle is not currently registered, this must be done when the title is transferred. (Once a registration month is established in our records for a vehicle it normally does not change).
Assuming that I don’t yet ‘Live’ in Texas. I’m wondering that If I purchase a car from out of state, that I could have the car initially registered to my address in GA (paying GA taxes on the vehicle, which for leases is much more sensible), and then transfer that into Texas using the new resident stipulation? The previous residence is a family home in GA if that matters, where my family still resides.
Is there anything I’m missing here? If I have a new car originally titled and registered in GA, would dealerships legally be able to ship it to me in Texas? I’m assuming if I pick up the car myself I could drive it wherever I’d like and then adjust the registration and insurance after the fact.
The only other loophole I can think of is the $10 ‘Gifting’ transfer fee. But I can’t imagine that would be doable with a lease or loan, only for something owned outright.
Hi,
I’m posting here because I didn’t want to start a new thread for essentially the same idea but I would like to get some updated and additional information as I am ready to lease again.
I believe I understand the concept of the cap cost reduction, to the new vehicle, due to the existing trade-in, in Texas.
I also understand that the price difference between the trade-in and new car would result in me paying taxes on that difference.
Example in which I believe I understand (these are not the real figures but are just to demonstrate):
new car value: $60,000
my trade-in value: $45,000
difference: $15,000
tax is paid on $15,000 in TX which = $937.50
So here’s my question:
I’m in Texas. I have a Ford vehicle I purchased new a year ago. It’s not a lease, it’s a regular purchase. It’s not paid off.
I will trade in my vehicle towards, and lease a Sequoia. There is positive equity in my trade as they are giving me more than I owe.
I worked with a dealer a bit but didn’t sign anything yet. Still working on getting a better deal from them.
However, the worksheet shows a tax of about $450 that I would have to pay, if I finalize the lease on the new vehicle. That’s it. Done. Out the door I could go. This implies that I am receiving a tax reduction similar to my understanding of the above example I gave. That is, my trade value seems to have been subtracted from the cost of the new vehicle and the tax on the worksheet almost equals the tax on the difference when I calculated it. When I calculated the tax on the difference between the trade-in and new car, it was slightly lower so I’m not 100% sure how they did the tax calculation but I’ll ask when I get back there.
They would still have to pay off the trade-in etc but it seems I am getting the “trade-in tax reduction”.
Am I understanding this right?
Thanks for any input from y’all…
If it is not paid off and you are trying to lease a new vehicle, you aren’t getting “tax credit.”
I am a Toyota guy, working at Toyota dealership, so reach out to me and I will take a look at your deal
In other words, although you financed the Ford, you are not getting “tax credit” because you are leasing, not financing it.
Lease or Purchase to Another Lease = No Tax Credit
Purchase to Purchase = Tax Credit
Ok well this makes sense and I had a feeling my understanding was too good to be true lol…
So I paid tax on the trade-in and I have to pay tax again because I am leasing.
What do you think the really low tax on my worksheet means then?
DM me, so we could go over this together along with your worksheet
When does BMW to BMW give differential tax credit?
-
Retail to Retail, Owner’s Choice, or Lease
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Owner’s Choice to Retail, Owner’s Choice, or Lease
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Lease buyout (Regular, Dynamic Payoff, or Trade assistance) to Retail, Owner’s Choice, or Lease.
Are you sure? In TX you pay tax on the full price when leasing, hence should be getting tax credit when leasing another car. That is unless the state screws you the same way as VA, where there is no tax credit at all.
But maybe I misunderstand @thx1138’s situation.
Yes, I am sure.
Then it sucks the same as in VA.
I think so, although I don’t know how VA tax works.
Don’t forget to analyze the actual lease “deal” while focusing on the tax situation
So, I called the Texas Comptroller, got through and spoke to a human who was very helpful! She was very well informed and the answer was quite strait forward.
Here is what I learned:
The cap cost reduction, due to trade-in, exists for all purchase and leases in Texas which ultimately lowers tax paid. If you have a trade, the owner of the vehicle will get to subtract the value of their trade from the value of the new car and pay tax on the difference. Done deal.
Notice I said “owner”… So here are the differences:
What determines WHO gets to reduce their cap costs depends if you are leasing or purchasing the new vehicle from the dealer.
Lease:
As y’all know, when you lease, you are not responsible for taxes. The owner (Lessor) is. The Lessor simply passes the tax bill (or savings) on to you. This “passing” can be negotiated. It’s up to the Lessor to charge you tax or to pass on a tax saving cap reduction from a trade-in. As mentioned in other posts, this explains why some leases can have “no tax” as a promotion. Obviously, in 99% of all cases, the Lessor will pass the tax bill on to you. So, if you’re looking at a lease and you got a trade and you don’t want to pay full tax again and the dealer is saying you have to pay tax on the full purchase price, it’s up to you to walk or not. The TX Comptroller clearly stated that the owner of the vehicle will receive the reduction in cap cost, due to a trade, and use the trade to reduce cap cost and therefore taxes paid.
Purchase:
It’s even easier when purchasing a new car with a trade and it’s the same exact reduction from a trade-in. The owner of the trade (considered me by the bank) still gets the tax reduction benefit, as above with the lease, but since I am ‘purchasing’, I am responsible for taxes as I am considered the owner. Therefore, the reduction in cap cost (difference between trade-in and new car price) is given directly to me and I pay tax on this difference.
Also, it doesn’t matter if you have a balance on your trade. The tax reduction is based on the trade-in value the dealer offers you and the new vehicle price.
I didn’t ask about trading with a lease but it’s the same thing. You’d have to negotiate with the new Lessor and work something out. You may have to talk to the Lessor of the trade. Not sure but, again, the goal is to get your taxes reduced by negotiating because in the state of Texas, SOMEONE will get that tax break.
Anyway, thanks everyone for all the info. Very helpful and helps me along my path!!
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I was one of the lucky lurkers who got an Owner’s Choice 2018 330e when Andy first posted this many years ago.
I’m 5 months out from the lease expiration and am starting to research on my next BMW and a lot of dealers have shopped creative ways to “pull-ahead” even though pull-ahead is no longer offered by BMW. One of them mentioned Dynamic Payoff but I’m still struggling to understand exactly what this is.
For reference there’s a negative $8k in equity value on the current car and even if my understanding in utilizing it as part of off-set to sales taxes won’t come close to bridging the gap. Can one of you experts help me unpack if this is an understanding issue on my end?