40% on the first $20,000 then 100% on everything over. Some other states also have excise tax on cars
Good info - I could never get the VA DMV to confirm how taxes work when assuming an out of state lease. If ever wanted a true luxury car my best bet would be to have in-laws lease it in NJ than lease transfer it to me. But that is definitely a post young child activity.
As for the tax, I canāt figure out if itās more Republican or Democratic. It brings in huge amounts of revenue (liberal) but is also horribly regressive and environmentally unfriendly (less liberal). The bipartisan nature of the tax is seen by itās existence throughout the Commonwealth both in NoVa and deep downstate. Countyās are free to do away with it but turns out on a local level somehow you have to fund schools and police/fire.
For the record, I hate the personal property tax and have discussed it with my state rep and state senator at different events. But it would require some sort of big state funding reform to get rid of it and coming up with a solution that works well in both NoVa and downstate is almost impossible.
Surely that depends on the full price vs the residual payment total. 4.15% on $56k ($2342 is more than 9% on $11k rental portion ($990).
Right. You just need to find 82% RV on 36 months to make it work in your example for the sale price of $56k with a modest 10% discount on $62,250 MSRP.
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I guess they tax on the sales price, im thinking about the property tax ignoring thatā¦you just have to do the math, a lot of these deals are for 24mths which spreads the tax less and some are high sticker but high residual like tundra so you pay more tax on the front and then have to worry about property tax on a 50k vehicle.
but soā¦ an i3 with a sticker of 56k sells for $44k - you pay tax of $1800. A lease say of 24mths at $340 would tax at $734 for depreciation. Thereās lots of examples you could give but blanket 4.15% on total is the same as 9 or 10% on depreciation - i dunno - does seem that VA is one of the worst to lease in 
I also go caught on purchase tax moving from a state that gave you trade in tax credit!
I was talking about most common 36 months, obviously. 24 months is a different story.
Needless to say most of my leases in VA are assumed :).
Iām a VA resident and have an Audi Q7 lease term that ends in August. If Iām understanding you correctly, when compared to leasing another new vehicle here in VA, assuming a lease from Swap-a-lease or similar service might be my best bet as Iād:
- avoid VA sales tax altogether
- potentially lower the monthly payment by working w/ the lender to back out any other stateās sales tax (I assume this is only possible for a car lease that originated in another state)
- pay lower personal property tax on a vehicle thatās dropped in value since lease inception, when compared to what Iād be paying on the same model if I leased new (If I assumed a 2018 X5 lease, my personal property tax would be lower than if I drove a 2020 X5 off the lot today )
Thatās actually pretty eye-opening. It would also give me peace-of-mind in the current economy if I assumed a lease with, say, only 12 months remaining versus taking on a new 36-month lease.
As it sounds like youāve done this a bunch, are there any downsides youāve realized from assuming leases? Ever gotten whacked with unexpected fees upon turning one of the vehicles in? Really appreciate any experience youāre willing to share!
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Bullets two and three are 100% correct. I always ask for significant pictures and run a car fax on the cars Iām thinking about assuming just to be sure. The first bullet is a bit of a grey area. I have assumed 6 cars in VA. Four the person at the DMV said nothing about sales tax. One time the person said " you know if you buy the car at the end of the lease you will have to pay tax." One time on one BMW lease the person asked for proof of sales tax paid. Luckily both of my BMW transfers came with a singed letter from BMW FS saying this is not a sales transaction and sales tax has already been paid.
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Assumed over a dozen leases in VA over the yearsā¦ The tax being ābacked outā or not is simply a question of how the state the car is coming from levies tax, BMW is really good about handling it all for you, if that happens to be what you are looking atā¦
With a lease transfer itās treated like you brought the car to VA form another stare (like you relocated), itās correct that no sale has occurred however VA mandates per code tax is paid UNLESS tax was previously paid on it, no matter the amountā¦
My best example is a lease I assumed from NH, no sales tax however the county had a fee of about $28, that counts as tax paid so I was not levied a tax on the vehicle. If for some reason you assume a lease where no taxes were paid on the original lease contract (in an assumption you just take it over, original contract stands) you would be liable for all of the VA sales tax.
Property tax is a county/city tax and is 100% of the NADA value of the car on Jan 1 x the county/city tax rate, minus any state property tax relief, if itās a private vehicle. It will just be prorated to however many days.
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No. It is 100% on anything over first $20k and you get tax relief only on this first $20k.
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I think we are saying the same thing, I was referring to the value of the vehicle used as the basis for calculating the tax, the property tax relief is a separate item, if the vehicle is private and not in the name of a business.
Iām really grateful for the responses.I am leaning towards BMW at the moment so Iām glad to hear theyāre helpful with this.
I want to be sure I understand one thing you said in your response b/c it may affect how I shop:
With a lease transfer itās treated like you brought the car to VA from another state
So if I assume a lease from within the state, am I stuck with the VA state tax thatās part of the first lesseeās payment? Is it only out-of-state leases where I might stand a chance of having the sales tax removed?
Iām liking the sound of this option with its flexibility and potential savings. If the car is in good shape with reasonable mileage it seems like a no-brainer over leasing a new vehicle.
No issues with local dealers not wanting to take the vehicle at lease end? No unexpected fees incurred? Anything you remember wishing youād known when you assumed your first lease?
Thanks again for your help!
Ursus is right it more nuanced. say the car is valued at 25K. You ONLY get the tax relief rate on the first 20K. You pay 100% IE NO TAX RELIEF on the 5K portion. Thinks start getting stupid expensive quick if the value of your vehicle is significantly higher than 20K.
Yes payments on assumed leases in VA are almost always stupid high because VA tax is usually rolled in. The one example that bucked the rule is my pathfinder that I assumed 7 months ago. Guy was moving to NYC and had to get out of the car. He put 7K down on a lease and his payment is $199 a month. I covered nissanās $250 lease transfer fee and Iām driving a 35K car for less than $200 a month and didnāt get asked about tax. Usually I have to go out of state. My last lease assumption before the pathfinder was a BMW X1 in Charleston. Got a one way ticket down, the guy I was assuming from covered the BMWFS transfer fee and when I registered in VA BMWFS backed the SC tax out of the monthly payment. That car was $235 a month. If you can be flexible on the size/type of car and are willing to travel a bit great deals can be found. Most of the general public puts money down on leases.