Leasing question..quick help needed

RRGOO7 · 10-16-2008, 06:54 PM

Hey Guys

Ive been talking with a dealer about leasing an M3. I was planning on putting 5500 down. The MSRP on the car is $64, 375. The dealer is claiming I will have to pay tax on the $61,000 lease sale price of the car. Is this true?? It doesnt seem to make much sense since i am only paying for virtually half the car.

shakan · 10-16-2008, 07:36 PM

Quote:

Originally Posted by RRGOO7

Hey Guys

Ive been talking with a dealer about leasing an M3. I was planning on putting 5500 down. The MSRP on the car is $64, 375. The dealer is claiming I will have to pay tax on the $61,000 lease sale price of the car. Is this true?? It doesnt seem to make much sense since i am only paying for virtually half the car.

Hm, not sure how Florida dealerships work but in a few states like SC when you lease the car you actually pay the tax on the entire sale price, however if you buy you pay no tax. I guess it's just designed as an incentive to buy vs lease.

RRGOO7 · 10-16-2008, 08:42 PM

Can anybody else shed some light on this situation?

GolfNut · 10-18-2008, 10:16 AM

This is a state tax and thus varies from state to state. in Texas, you have to pay sales tax on the entire negotiated price at the beginning of a lease, even though you are only using a portion of the life of the car.

What's worse is that if you buy the car out, you have to pay tax again on the buyout price. Thus, if you lease a $75,000 car, you pay tax on $75,000. If you buy it out at lease end for say $40,000, then you pay tax again on that $40,000. So you essentially paid tax on $115,000 for that car. Makes no sense to me.

In Texas they use the owners choice program to get away from this double taxation. Under owners choice, you have title in your name versus BMW and thus you aren't buying car at the lease end. You are technically refinancing or paying off balance of loan, hence no additional tax at buyout. I understand Illinois residents are in a similar situation. I am not sure about other states, but I also understand we are the exception, rather than the rule. In most states, you to pay tax monthly based on your payments. An odd thing there is you pay sales tax on your total payment including the finance charge, not only the principal portion. Again, this doesn't make sense to me, since you don't pay sales tax on any other finance charge. Then again, we are talking about taxes.

I don't know how your state works. If you doubt what your dealer is saying, you could make a quick call to any other dealer in that area and ask them how it works or call the state taxing office. If they all say the same thing, it is probably correct. If it lists the amount as sales tax in your contract, the state could go after them for tax fraud if they overcharged you.

Best of luck with you purchase/lease. You'll love the car!

!Xoible · 10-18-2008, 10:17 AM

Quote:

Originally Posted by RRGOO7

Hey Guys

Ive been talking with a dealer about leasing an M3. I was planning on putting 5500 down. The MSRP on the car is $64, 375. The dealer is claiming I will have to pay tax on the $61,000 lease sale price of the car. Is this true?? It doesnt seem to make much sense since i am only paying for virtually half the car.

im not sure about FL but in cali you do not pay tax up front unless ur buying. not leasing.

i thought u hated the M3 and 335 was faster, and u werent impressed at all?
who's gonna sell m-techs now?

10-16-2008, 06:54 PM	#1
RRGOO7 Colonel 362 Rep 2,451 Posts Drives: GTR Join Date: Dec 2006 Location: Miami FL iTrader: (13)	Leasing question..quick help needed Hey Guys Ive been talking with a dealer about leasing an M3. I was planning on putting 5500 down. The MSRP on the car is $64, 375. The dealer is claiming I will have to pay tax on the $61,000 lease sale price of the car. Is this true?? It doesnt seem to make much sense since i am only paying for virtually half the car.
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10-16-2008, 08:42 PM	#3
RRGOO7 Colonel 362 Rep 2,451 Posts Drives: GTR Join Date: Dec 2006 Location: Miami FL iTrader: (13)	Can anybody else shed some light on this situation?
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10-18-2008, 10:16 AM	#4
GolfNut Enlisted Member 1 Rep 35 Posts Drives: E93 M3, E92 335 Join Date: Jul 2008 Location: Houston, TX iTrader: (0)	This is a state tax and thus varies from state to state. in Texas, you have to pay sales tax on the entire negotiated price at the beginning of a lease, even though you are only using a portion of the life of the car. What's worse is that if you buy the car out, you have to pay tax again on the buyout price. Thus, if you lease a $75,000 car, you pay tax on $75,000. If you buy it out at lease end for say $40,000, then you pay tax again on that $40,000. So you essentially paid tax on $115,000 for that car. Makes no sense to me. In Texas they use the owners choice program to get away from this double taxation. Under owners choice, you have title in your name versus BMW and thus you aren't buying car at the lease end. You are technically refinancing or paying off balance of loan, hence no additional tax at buyout. I understand Illinois residents are in a similar situation. I am not sure about other states, but I also understand we are the exception, rather than the rule. In most states, you to pay tax monthly based on your payments. An odd thing there is you pay sales tax on your total payment including the finance charge, not only the principal portion. Again, this doesn't make sense to me, since you don't pay sales tax on any other finance charge. Then again, we are talking about taxes. I don't know how your state works. If you doubt what your dealer is saying, you could make a quick call to any other dealer in that area and ask them how it works or call the state taxing office. If they all say the same thing, it is probably correct. If it lists the amount as sales tax in your contract, the state could go after them for tax fraud if they overcharged you. Best of luck with you purchase/lease. You'll love the car! __________________ 2008 M3 Vert 6MT l Sparkling Graphite l Black Leather l Carbon Leather 2007 335 Coupe 6MT l Montego Blue l Black Leather l Aluminum l 19" M6 Reps l Dinan 2009 Mini Cooper JCW l Chili Red l Black
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