What can you do if you live in a state with terrible lease taxes?

Ask the Hackrs
1

For example the states that charge you taxes on the total car purchase price. I just think that is absurd and criminal.

Is there any way to get around this? For example, if you drove to another state with better taxes for leasing cars… Will you be okay if you’re going to be keeping and using the vehicle in your home state? Anybody have experience with this before?

Thanks.

2

It’s not as bad as it sounds IF state has low sales tax. I’ve shown this example before:
VA 4.15% on full price vs CA 9% on rental
$50,000 selling price, 50% RV
$2,075 VA vs $2,250 CA

3

MD is around 6%…

If I could get it in VA or PA, its either 4% or 3%… Totally worth the 1hr drive imo.

Is it possible though, sorry I’m not finding a definitive answer online.

4

Tax is based on where you register the vehicle, not where you buy it.

4 Likes
5

dammit. 20charecters

6

Don’t you get a tax credit when trading it in. So in MD you pay 6.2% tax but when I trade my lease back in, I get a tax credit for the next vehicle.

7

You return a lease. You dont trade in a lease

8

So if you pay tax on the full price, that amount is just lost? Doesn’t make sense.

9

I think TX works the same way. When a lease is returned the lessor gets a tax credit which they can pass on to the consumer.

10

I never got any tax credits for lease returns nor for trade-in financed car

11

Well, for the state it’s just the same as you bought a car and then sold it after 3 years.

12

I hear the dealership saying something like that… But I wasn’t sure exactly what they were talking about.

It was news to me.

13

In Georgia they charge full sales tax (or they call it TAVT here) anytime the title changes. If a person trades a car in and they are on the title of the current car and the new car (or they are the lessee on a lease), they get a trade in credit. However, in the case of a lease, the lessor, not the lesser, is on the title. That’s why you cannot trade in a leased car and get tax credit, even if you are the one who paid it on behalf of the lessor.

This really bites you if you decide to buy the car at lease end, because at lease end, even though in reality you are “keeping” the car, the title change from lessor to lesser triggers the TAVT tax anew. So you would essentially be paying twice for the same car.

This is all supposed to be changing on Jan 1 in GA, which should hopefully make leasing cars in GA better.