Vehicle Sales Tax Questions

stickguy

I can't comment on what you were told (not being in CA), but in NJ you get 20 days IIRC, and there aren't any restrictions about which direction to point!

But, given those facts, best bet sounds like doing the dela why you (or your wife) are louisiana, and fed exing the paperwork down, doing the DMV, and shipping the plates and what not back up (or bring them with you).

Without know ing your specific plans, it's hard to say what's best, but if it were me, I would call the CA and LA DMV and get an official answer.

billc112

When I leased my Saab in 2002, I lived in NY. At the initiation of my lease, I was charged about $1700 tax, which was rolled into my monthly lease payment. I was paying about $445 for about a year. I then moved to California, and since that time, I have been charged an additional $35 per month for "sales tax". I have never been able to get an answer as to why, if I have already paided sales tax in NY, California can charge me sales tax again.
Any help would be greatly appreciated.

Kirstie_H

Are you entirely sure that it's sales tax? I am obviously not familiar with tax code in every area of the country, but in Missouri, when you lease a vehicle, your sales tax AND your property tax are rolled into the payment.

kyfdx

Because the two states figure sales tax on a lease two different ways...

Some states (like Ohio) charge the tax upfront.. You can have that rolled into your lease payment, but it is still paid out of the proceeds to the state government at the time of sale.. and is remitted by the dealer.
Other states (like KY) collect the sales tax on the actual payment each month.. it is remitted by the leasing company...

Unfortunately, you are in a catch-22.. and, I'm afraid there is no way out.. This is a problem that is becoming more and more prevalent, as state governments look for ways to increase revenue..

I'm not an expert, but I'm seeing this problem more and more in these discussions.. A call to your local DMV might give you more specific answers..

regards,
kyfdx

sempurr

From my research I gather that a reasonable deal is to pay a few hundred dollars above or below invoice depending on supply and demand. My question is, is this general rule based on price before or after tax?

Thanks,
Mary Ann

danf1

There are two ways to look at this. If you are negotiating from invoice then you do not include taxes and plates. If you are looking for an out the door figure, then you want taxes and plate fees included in that price.

reinrev

My questions don't fit into any message already on the board !... and there's a pile of them !

I live in Europe and am thinking of importing a new Ford Mustang.

There are messages that mention that some States don't have sales tax but in any case I suppose I could claim exemption as the vehicle is for export?
What taxes are on applied on a new vehicle in the States ? Is there a Federal tax on top of any State tax/es?
I will also need to find the car in an East Coast/Southern State near to good Harbor facilities to lower the cost of transport "inside" the USA. Lastly, should I go straight to Ford USA or do some dealers have better deals on a new car than the company itself?
Thanks to anyone willing to answer... even one question!
Regards
Reinrev

reinrev

My questions don't fit into any message already on the board !... and there's a pile of them !

I live in Europe and am thinking of importing a new Ford Mustang.

There are messages that mention that some States don't have sales tax but in any case I suppose I could claim exemption as the vehicle is for export?
What taxes are on applied on a new vehicle in the States ? Is there a Federal tax on top of any State tax/es?
I will also need to find the car in an East Coast/Southern State near to good Harbor facilities to lower the cost of transport "inside" the USA. Lastly, should I go straight to Ford USA or do some dealers have better deals on a new car than the company itself?
Thanks to anyone willing to answer... even one question!
Regards
Reinrev

beliver

reinrev:here are a few answers to your questions.
using a dealer near a port facility will not save any domestic shipping as the shipping is the same (except Alaska or Hawaii) all over the states. Even if you live in the same state as the car was manufactured in the shipping will be the same.

as to the taxes, the only tax we pay here is the state sales tax in the state the car will be registered in. Since it will be for expoert you most likely would not have any usa state sales tax to pay. There will probably be a "export" tax applied.

If you consider the shipping cost for overseas delivery, the cars selling @ nearly full MSRP in the case of the GT because of demand and there probably would be a import duty in the country of destination as well.

don't know what country you reside in but since the US dollar is getting a little weaker this may offset some of the cost disadvantages. I don't know if Ford has any export programs where you can take delivery here, take a little vacation here and then have the car shipped back for you when you go home. Mercedes and Volvo have "european drive and tour" programs.

If you are in Europe why would you want a clunky Mustang when you have so many really neat sport cars to die for over there? The new Mustang is mostly hype and little substance IMHO.

believer

rroyce10

... **The new Mustang is mostly hype and little substance IMHO** ...

Have you driven one lately ..?

Terry.

beliver

royce10: let me qualify what I said. I agree the GT is a nice ride. A lot of performance for the money and decently bolted together.

However, the bulk of the sales will be the six cylinder and the several I drove did not impress. My son has a 2004 ( one of the last 5 built last may) and I really cannot see that much difference not counting the retro styling. If i wanted a "new" 1967 I'd go to a B-J auction and get a real one LOL !!

regarda believer

rroyce10

.... ** I'd go to a B-J auction and get a real one** ...

You kinda lost me on that one .. whats a B-J auction ...?

Terry. :shades:

wiprunner

well I am not 100% but I think he means Barrett Jackson.

http://www.barrett-jackson.com/

rroyce10

..... Ooooh, you mean the: Retail plus 20% auction ..l.o.l...

It's unbelievable what some of those folks will pay .... that just goes to show ya .. :confuse:

Terry.

lipdmd

Hi everyone. I have a quick question for anyone that can answer this. I am currently a resident of Florida. However, I am stationed in the state of Kentucky. If I purchase a vehicle in the state of Kentucky where I am stationed, am i exempt from sales tax? How does this work? And what is the diff if I register the vehicle in kentucky or florida?
Thanks!

danf1

You will pay sales tax to whatever state you choose to register the car in.

beliver

royce10: If you are a REAL car guyI can't believe that you did not know what B-J is
The big one for Florida is @ WPB. Eye candy for every taste and you CAN actually get some good deals if you know what you are doing. They got a lot of press over the 3.5 Million $a one -off Olds concept car went across the block out in Arizona last winter but that as you can imagine is the exception to the rule. Some high roller bought it for a blooming car museum in Colorado. You are right tho, a fool and his money and all that for sure.

regards Believer

vw04

Hello there, I have a tax question for you....as exciting as this sounds.

How do you calculate sales tax with the cap reduction coming from
a trade-in of a leased vehicle.
Example:

Want to lease a new vehicle, say car2.
Car1 is a vehicle that has 2 months left on the lease and is worth more than the
buy-out value. buyout is 14000, the dealership will pay you 16000 for the vehicle and will apply the 2000 as a cap reduction.
From what i understand the monthly payment for car 2 has to reflect this trade-in of a leased vehicle(car1) and there is another way to calculate the sales tax.
In this situation the local sales tax is 7% but when the dealership calculates tax on
the monthly payment it equates to approx 1.88% (these are rough numbers)
thanks for your help!
cheers, Chris

jasmith52

Here's my take (guess) on your tax calculation.

Your lease payment consists of two main parts. There is a taxable depreciation charge and a non taxable interest charge. Since you are getting credit for some of the depreciation portion due to the trade-in then the net taxes will be low.

Therefore when run all of the numbers the taxes amount to only 1.88 percent of the total lease payments but represent the full 7 percent of the (net depreciation less the trade-in credit).

So either your lease is short or you are paying lots of interest. If you want everyones (on this forum) opinion of how good a lease deal it is then post the lease details. Do you know the money factor that was used in the lease calculation ? Do you know the residual and the cap cost of the vehicle ?? Some real numbers would help ??

vw04

Here are some numbers to sink your teeth into...

residual 15529.8
term 48 mos
money factor 0.001
monthly payment 445.95
monthly payment with tax 454.35 (tax is 8.40)
local sales tax here is 7%
cap cost reduction from trade-in of car lease 1620.45 (trade-in allowance 16546.14
minusbalance owing on trade-in 14925.69)
amount to be amortized 19002.75(net cap-residual)

thanks!

jasmith52

Something is not right here

The lease payment is right.

I get an average depreciation of ($19002/48) = $395.
Interest @2.4 percent (2400* .001 money factor) of average loan balance ($15529 + ($19002/2) ) is around $600/year or $50 per month

==> total lease payment = $395 + $50 = $445

However the tax doesn't seem right, as you pointed out. Tax on $395 @ 7 percent should be around $28.

Are they applying your trade-in credit less a couple of lease payments to the tax payments ?? That would be my only guess ?

Maybe I'm missing something here, and perhaps some of the other, smarter, posters can help

vw04

I think i have figured it out...the amortized amount minus the balance owing on the trade-in will give you 19002.75-14925.69=4077.06. I would imagine that we shouldn't be paying tax twice...ie buy-out of the car and you pay tax on the lease, does this make sense?
then we have to pay tax on the downpayment of 1620.45 which is coming from the trade-in value of the vehicle minus the amount owing for buy-out (as above)
4077.06+1620.45=5697.51*.07 tax, divided by 48 months...8.31 tax per month..
Not an exact number, but pretty close.
What do you think?
Looks like the dealership pays tax for the trade-in vehicle and reduces their profit, while we benefit from this fact. ?? about $900 savings by my calculations over the term of the lease.

gfour

Need clarification, PLEASE? My wife and I have purchased/financed 7 new Bimmers over the past 15 years and are considering this new lease offer from BMW. I'm not clear on it.
Using the financial tool on BMWUSA website, they seem to encourage $2500 down payment. Does this include tax, title, cap reduction, etc? Or, does one have to pay the tax seperately. This is in Texas, where we have a 6.25% sales tax on all automobiles. Using their promo, a $36,900 msrp results in a $369/mo. payment for 36 mos. and 10k miles per year. That sounds awful good if only 2500 is required at signing, does it not? Also, if you have a trade (2001 325ci, 49.5k mi. & really nice condition) valued between 16k and 18k how would that be handled. The dealer told me they would issue me a check for my car and that the trade could be used to offset the sales tax. That does not sound legit to me. And when you sign a 36 mo. lease you pay sales tax on the entire sales price, not just the 39% that you are using, in the event you walk away at the end of the term. Can anyone shed light on this for me? I plan to see them next week and would like to be able to close a deal on a 3.0 and feel comfortable with the end result. Thanks in advance.

blue58

I leased a Maxima in Illinois and moved to WI. When in WI I started paying a monthly tax. Not that Im trading in the maxima and 3k upside down, the dealer is saying that I have to pay tax on that? Is this correct? Is it possible that the tax was already included in my monthly payment in IL? I feel like Im getting double taxed.

kyfdx

1) Texas.. you pay sales tax on the entire car, even if you are leasing it.. This is one reason that I wouldn't lease in Texas...However, the lease deals are pretty favorable on the X3.

2) Trade... the dealer is just saying that you can use some of the money you receive from your trade to mitigate your upfront costs on your lease.. No magic there.. it is your money, but you are still paying the tax.

3) Just because they suggest $2500 down, doesn't mean you have to make a down payment... that is just to make the monthly payment look better.. If you roll that $2500 into a 36 month lease, it will raise the payment by about $70/mo.

Post details over in the X3: Prices Paid forum, and I'll run some numbers for you..

regards,
kyfdx

kyfdx

Basically... you are screwed..

In Illinois, you pay tax on the entire car at purchase, even on a lease... But, you then moved to WI, which taxes the monthly payment..

Do you have to trade in the Maxima? You could just finish out the lease and turn it in? If you are $3K upside down, then how much are the monthly payments and how many do you have left?

regards,
kyfdx

jbradb

In Texas, we paid the whole sales tax (6.25%) up front and rolled it into the lease. Now, we've decided to purchase the car (a loaded Toyota Highlander V6 limited with 42K miles) because the buy-out amount of about $16K seems low to me.

The dealer says we have bring in the car to sign papers and pay "tax, title and license." He won't be clear on how much this comes to, which is frustrating.

My question, what possible "tax" would we have to pay in Texas to buy this car? Surely not 6.25% AGAIN!!

Thanks.

kyfdx

I'm not from Texas, but...

When you leased the car, the money for the tax came out of your pocket, but since the title is in the leasing company's name, they technically paid the sales tax..

Now, you are buying the car from the leasing company.. My guess is that you will now be paying sales tax (again), just like you were buying the car from any used car dealer.. I'm not sure how they calculate tax on used cars in Texas.. It may be on the actual purchase price, or on "book value".

Which... is why leasing isn't too popular in Texas (or Illinois, for that matter).

regards,
kyfdx
(not a tax expert)

rroyce10

.. **My guess is that you will now be paying sales tax (again), just like you were buying the car from any used car dealer.. I'm not sure how they calculate tax on used cars in Texas.. It may be on the actual purchase price, or on "book value".
Which... is why leasing isn't too popular in Texas (or Illinois, for that matter)** ...

The tax is based on the current selling figure .. no credit for any previous contract stuff ... Ohio also gets "all" the tax upfront on leases, with no credit at trade or purchase time .. I think that makes 8 (?) states .... thats a nice racket they got going ...

Terry.

kyfdx

Yup.. Ohio just changed to that recently.. But, I think if you trade a car you own on a new leased car, you'll get a tax credit for that trade-in.. but, of course, no credit for the leased car, when you turn it in to get another one...

In KY, they still just tax the lease payment.. not that I'm leasing anything right now.

I'm seeing more and more of the situation above.. Where someone leases in a "tax the whole car" state, then moves to a "tax the payment" state... They get it from both ends... That really blows...

Dealer associations really pushed to get the tax credit on trade-ins, as that lowers the cost of a new car, pushing up sales.. but, I wonder how this new tax on leasing affects them? I would think it would really hurt import dealers more, as their leasing programs are usually much better.. Maybe the domestic car dealers have been pushing it to level the playing field?

Just another conspiracy theory..lol.

regards,
kyfdx

rroyce10

....... **their leasing programs are usually much better..** ....... what have you been smokin'..?

When the law passed 2(?) years ago ... that market went south to the tune of about 30%+, it crashed hard .... actually the domestics got hurt the most, then like anything else in life people get that short term memory loss and ~ Wango Tango, it becomes a "no counter" ......

Terry.

kyfdx

Well.. in the cars that I like, the imports have much better leasing programs...

But, I can't see leasing, if you have to pay tax on the whole car... I guess for the guys that get 60 month leases on a domestic car with a 30% residual, it is no big deal (they are screwed, anyway) but, if I'm leasing something with a 60% residual for 3 years, I just couldn't stomach paying tax on the whole shebang...

I think I'm out of leasing, anyway... I'm following the rroyce method of buying late model used cars from now on....

hpowders

I am thinking of leasing a BMW in Georgia this summer. I live in Tampa, Florida.
Is there any tax that I would have to pay above and beyond the tax I would be paying if I leased the car in Florida?
Thanks.
hpowders

jbradb

kyfdx,

You are correct, sir! I have discovered we will have to pay sales tax again on the amount of the buyout. Fortunately, still a good deal.

FYI, the leasing company said we had to go to the dealer to finalize the sale. The dealer was giving us the typical run-around, being unclear on the final amount we would have to pay, etc.. A little pressure on the leasing company, and they just faxed me all the paperwork to complete the sale with them! We have to pay the county the sales tax ourselves, but SO much less headache!!

Thanks!

kyfdx

Good deal.. As Terry always says... deal with the bank, not the dealer...

Looks like you did good!

eric326

I'm currently living in Chicago and will move to Seattle next month. I'm thinking about buying a new car in chicago area before moving becoz relocation fee will be paid by my company, and also becoz I might be able to get a better deal here. My question is if I pay the sale tax in chicago, will i be charged sale tax again when I register my vehicle in seattle? (Illinois car sale tax is 8.75% while King county in WA is over 9%). What other options do I have?

kyfdx

If you buy the car in your name, then you won't have to pay the sales tax again in WA...

But, if you lease, IL charges sales tax on the entire car... Not sure of WA tax laws, but if they tax the monthly lease payment, you'll get hit again, even though you've already paid the entire tax bill in IL.

Moving to another state with a car you already own is a non-taxable event.

regards,
kyfdx

osubeav

I would definitely check before purchasing the car in Chicago, especially if you are going to move to WA right away. I have heard that there is a time period from the purchase date that is used in deciding how much tax to charge. I think this is primarily to ding people that move in from a no sales tax state like Oregon.

Never underestimate to ability of this state, and especially King County, to extract your money from you any way possible.

eric326

I've been trying to check WA's rules but only find limited information on their website (http://dor.wa.gov/content/taxes/other/tax_motorvehicle.aspx):

"If sales tax was not paid at the time of purchase, use tax applies at the time the vehicle is registered with the Department of Licensing. This would occur if a vehicle was purchased from a private party or if it was purchased outside of Washington."

I didn't find any information regarding the time period you mentioned. I've sent them an email and will get back to this board when i get an answer.

eric326

Moving to another state with a car you already own is a non-taxable event.

This intuitively makes more sense and I hope you are right. But tax laws don't always make sense. Do you have any link to an official source of this? The new vehicle will be moved to Seattle within one month of purchase. I wonder if this makes any difference.

kkaissi

If I live in Arizona and im moving to Northern Cali for a Job in AUG. My question is, If I buy a Car in Oregon (Pay NO Sales tax), can I register my Car in Sacramento without paying the California sales tax?

kyfdx

Well.. I don't have the specifics.. I would worry a little, if I didn't have the title in hand and the plates all squared away before I moved.

IOW, if you have IL temporary tags, and tried to register the car in WA, I think there might be a problem..

I guess it all depends on how quickly you have to re-register.. You'll have IL plates that are good for one year, I assume... I know locally, you are supposed to change over your driver's license, plates, etc. within one month after you move into state, but most people take much longer than that.. If you put off all of that for six months, I'd guess it would be a moot point.

(I'd check specifically with WA state before I did it, though..)

regards,
kyfdx

kyfdx

Generally, you pay sales tax wherever you first register the car.. If you are a CA resident, you can't get out of paying sales tax in CA by buying a car in Oregon..

eric326

I called the DOR in WA and the tax specialist told me I will be charged for the difference of the sales tax between Chicago and Seattle. She also pointed me to this link:

http://dor.wa.gov/content/taxes/use/default.aspx

It basically says the same thing. It also mentions the exemptions for use tax:

"Exemptions — Persons who are residents of another state and move to Washington are exempt from use tax on their household goods, personal effects, and motor vehicles, if they acquired the property more than 90 days prior to moving to Washington."

If I knew this earlier I would buy the vehicle 3 months ago. Re-register late may be a little risky, considering I probably won't save much (8.75% vs 9.1%). I guess one can use a temp plate when buying a car and pay all tax after moving to a new state. But paying state tax when buying might be a good idea becoz I can put the tax into financing.

Thanks a lot for replying. I hope this info is useful to people in similar situations.

kyfdx

90 days.... I guess that makes sense... Something to make it a little more difficult for people trying to avoid the sales tax.. Especially with "no sales tax" Oregon right next door... Good info.

regards,
kyfdx

osubeav

Ahh, what did I tell you about WA and taxes?

maxvenum

I am looking at buying a new truck. I am currently a college student living in one state planning on moving to another state (either Arizona or California), and I will be buying my new truck before I move. I've heard that Arizona or California will probably make me pay sales and/or use taxes even though I paid taxes to a different state. Anyone know anything more about this? Is this true? Is there a way around paying taxes twice on the new vehicle? Is it possible to directly register it in Arizona or California (once I determine where I am moving for sure) and then just pay tax to that state? Since my current vehicle isn't mine, I can't simply put the existing plates on my new truck and hope I don't get pulled over between then and when I get to my new state.

maxvenum

I just reread one of my questions, and it sounds a little ambiguous: "Is it possible to directly register it in Arizona or California (once I determine where I am moving for sure) and then just pay tax to that state?"

I mean register it in Arizona or California before I have moved out there.

ruby2zdy

But a person can own property in any state. Let's say for argument's sake, since it's nowhere near true, that I'm very wealthy and I own property in CA, WA, CO, NY, and UT. Surely I wouldn't have to pay sales tax in each of those states if I bought a car in a no-sales-tax state. No?

According to OR vehicle code, if you buy a car there, you only have to show them proof of age and "proof" that you're an OR resident, and that proof can be an OR bank statement dated 60 days from the date of purchase. And that's just to register the car. You can also get temporary registration (so's you could drive it back to WA to register it, among other things). The WA veh. reg. site says (at link title) "A $15 out-of-state fee if your vehicle was most previously titled or registered in another jurisdiction". OTOH, they do charge a "use tax": "Use Tax is charged at the state tax rate in effect where you reside. Credit is given for any sales tax paid to another state or country, if proof of the tax paid is submitted." But when I moved here (WA) (late Dec. '04) and registered my vehicles here (previously reg. in CA, most recent purchase July '03), I didn't have to pay a prorated sales tax (I assume that's what they mean by "credit"). There must be a period of time during which you'd have to pay prorated tax, and after which you don't. So if you had a friend in OR whose address you could use, you could open a bank acct there for "proof of residency", register the vehicle there, and Bob's yer uncle. No? Surely people who live in Vancouver WA (just across the border from Portland) buy their cars in Portland to get around the WA tax.

kyfdx

A lot of states require you to have primary residency to register the car.. IOW, they want to see your driver's license.. I'm sure high sales tax states like WA or CA, that have a "no sales tax" state next door like Oregon are especially vigilant.

People that legitimately move to another state usually wouldn't have to pay sales tax again on a car that they own.... But, there are usually processes put in place to keep those that are trying to avoid being taxed at all...