Hoping I can get some clarity on VA taxes on leases as I am a bit new to the area and have been trying to tie this all together. Thanks in advance!
In VA you are taxed up front on the cap cost of the leased car (sales tax rate of 6%,Fairfax county) and then 4.15% tax rate based on the value of the car each year.
If I end up with a leased car cap cost (final sale price) of $45k should I expect to pay the following?:
Taxes up front at signed lease = $2.7k (6%)
Annual prop tax, I think are collected each October = $1.9k minus the depreciation (4.15%)
Does this sound correct? Has me re-thinking a lease as an option vs a low mile CPO to try and cut the annual property taxes down with the lower cars value. My current S3 lease is up in January.
Fellow Fairfax county resident here. Sales tax is on full sale price x 4.15%. Property tax is more complicated. I’ll take bilal’s rate since it’s in the ballpark. Assuming the car is for personal use the first $20,000 of value it’s assessed at the same rate but a percentage is forgiven. It’s varies year to year (depending on god knows what), but I’d guess usually 40% to 50% is a decent number.
So in round figures 4.57% x 20000 - $914 x .5 = $457
Plus 4.57% x 25000 = $1142
457 + 1142 = $1597
It will go down annually as the car depreciates.
Expensive cars in Virginia suck ass, and with the tax law change I can’t even write it off anymore. It’s held me back from getting an m3 and a f-type over the past few years.
The sales tax isn’t really that bad although definitely not great either. It’s the annual tax that really hurts. The only way to avoid big car tax bills in NoVa is to drive old cars. I don’t have any interest in doing that so I am leaning towards non-luxury brands and brands that don’t hold value well like Volvo, Infiniti and Genesis. You pay annual car tax on NADA value so a car with inflated RV is ideal.
In the end, my taxes are about the same as when I lived in MD and lower than living in DC. Doesn’t mean I won’t rail against car tax though. Taxing automobiles in 2019 shouldn’t be done the same way the Commonwealth taxed slaves in 1819. Stupid tax is regressive, unfair and environmentally terrible.
You mentioned Infiniti. The prorated PPT for my 61k Infiniti Q50 Red Sport was about $520 for THREE MONTHS. So that’s over 2k for PPT for the entire year on leased Infiniti. Absolutely insane.
To calculate the tax on an item assessed at value (for example $5,000), divide the assessed value by 100 and then multiply by the tax rate: The current tax rate is $4.57 per $100 of assessed value.
($5,000 Ă· 100) Ă— $4.57 = $228.50
How are vehicles assessed?
The state requires that the value be from a recognized pricing guide, applied uniformly, and as of January 1 of the tax year. To meet these requirements, Fairfax County uses the January edition of the J.D. Power’s National Automobile Dealers Association (NADA) Official Used Car Guide. For more information regarding vehicle assessments, please refer to our Vehicle Value page.
And yes, the hardest part (and what changes) is the annual depreciation, and what amount of that is forgiven.
I’ll add in another wonderful tax tidbit about our state. If you swap a lease with someone, you will pay the 4.15% tax rate when tiling it in Virginia, even if taxes were already rolled into the lease.
There are actually a lot of exceptions to that. If Virginia recognizes tax paid in the other state they will apply the taxes paid to the Virginia amount. I know md and dc are recognized. Also if the lease is more than a year old it’s straight 4.15% on the monthly. This is according the va dmv but ymmv.
You say prorated so I assume it’s for your first three months of ownership. Got me thinking about my Acura lease and I looked at my first tax bill. County valued my car at 45.3K. I paid under 44k. That first tax bill might have some issues. Make sure they aren’t valuing your car way above what you paid. Not sure what system Fairfax uses to value cars but a used Infiniti, even with only a few hundred miles, should be valued way below MSRP.
Interesting, I was told in writing that if I take over another VA lease I don’t need to pay VA full value taxes again. Could not get DMV to say the same thing about DC or MD lease in writing. I always did wonder what they would do with a lease that was a year plus old. Always assumed they would charge me tax based on some books value of the car.
That’s good to know. I couldn’t find any information on that in my search. I think I’ll check and see if I get the same answer. If so, that could mean lease transfers may not be a bad option here.
Sales tax is always 4.15% of sales price, except maybe Alexandria has a special tax? Property tax varies wildly though, i.e. I pay 3.6% and the same roughly 50% discount on the first $20,000
I’d estimate 5% of the vehicles in Arlington have illegal out of state registration. It works best if you have family living out of state and just register at their residence. It’s not worth it to me now (I did it when I was just out of school with no assets) since it requires lying to Insurance. You have to lie to insurance about where you garage the car and if you had a serious accident they can figure out you were lying to them and decide to say too bad/you are on your own to pay this claim.
