Sales tax in Virginia is levied on the ENTIRE value of the car, not just the depreciation as is done in most other states. The rate is 4.15% but can be higher with the addition of local taxes. In Fairfax county, of instance, it’s 6%.
This obviously sucks and reduces value.
I have a question though:
If one wants to exercise the purchase option at end of lease, is sales tax applied to purchase price? Obviously, this would be double taxation and wouldn’t make sense but the government rules don’t necessarily follow common sense.
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As one leasing a vehicle in the NoVA area, I’m interested in this discussion as well.
@santefejoe: did you check with the dealership yet?
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I haven’t leased in NoVA yet… considering it and this would be a factor.
It’s still 4.15% in Fairfax. And you will not pay tax again if purchase your car, I’m pretty sure. Right, @conanohasselhof?
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“It’s still 4.15% in Fairfax. And you will not pay tax again if purchase your car, I’m pretty sure. Right”
This is correct.
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ye, you dont pay that 4.15% again, still fairfax area dealerships are such rip off, i never get any cars around this area
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You need to bring proof of taxes paid when originally leasing the vehicle. I still had to pay taxes on one because Ally financial did not record them right but over the years I have not on my others
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I am interested in the the same question but for Maryland residents. Anyone with experience?
Does anyone know if you takeover a lease out of Virginia or in Virginia, do you pay taxes upfront for it or its added to the payment?
MD, PA for lower dealer fees. Otherwise, you can still get the same deal as everywhere else by cold calling.
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This is a more interesting question. I have assumed several leases from outside the state of VA and never had to pay VA sales tax when I registered. If I was assuming a lease that rolled tax into the monthly payment that was also backed out by the lender after a phone call from me. Needless to say most of my leases in VA are assumed :). Oh and you get whacked with personal property tax in VA no matter what you do. Paying sales tax on the full amount VICE on the payment AND paying personal property tax on top of that is 172% BS. One of my only Republican views. That law needs to change.
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Thanks and I agree about the taxes its crazy in VA.
I’ve said it before, but will repeat: 4.15% on full price is not worse then 9-10% on rental portion only. Property tax is a different story, but many other states have it also.
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That is correct, as long as the original lessee paid some taxes… The best example I can think of, I leased a truck from NH, $24 in county taxes at the time of the lease, that was enough to waive taxes on my assumption. If no taxes paid you will be levied with them.
Agreed and VA does not tax manufacture incentives, like the $15250 for my Ioniq electric.
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Now that’s a hack.
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Yup. In terms of sales tax, MD is worse. For the average lessee, 4.15% of SP in VA is probably ballpark very similar to 8.875% of lease payments in NYC. For hackrs the latter is better if you get a great deal on a lease.
The property tax, though…
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And @Mpower22 also made a good point that all incentives are untaxed in VA. TX is probably also worse.
Good article here:
https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585/
Looks like most states DO NOT have personal property tax. Texas does have a higher tax rate than VA but no personal property tax on cars. Like Ursus said probably close to a wash, but its clear that VA has to be in the top 3 most expensive states to lease a car given the tax on the full value (minus incentives) plus personal property tax. Another fun treat is that the state subsidizes the property tax for the first ~25K. Cheaper cars have a much smaller tax bill. Cars over 25K get expensive quick. Also just to make it more complicated there are massive differences in the rate by county and municipality…