Help with Pennsylvania-specific leasing calculations

Hi I'm hoping to get some answers to my questions but for PA only because that's where I live. Please let me know if my assumptions below are correct:
It looks like the Dealer decides whether aquisition fee or DOC fee is upfront or rolled to cap cost, and that choice appears to be either/or. Correct?
Tax is taken out of any down payment cash that is remaining after you pay upfront fees. In other words, any cap cost reduction that you pay out of pocket is taxed.
The above does not apply to dealer discounts, incentives, Dealer cash or rebates, OR trade equity.
And finally is there an algorithm I can use to determine how much of my down payment goes to "due at signing" and how much goes to reducing cap cost? The problem I run into is that to determine first months payment I need to know the final cap cost, BUT to determine how much of my down payment I can use towards lowering Cap I need to know my first months payment. It's a vicious circle!
Comments
Trade equity, consumer incentives/rebates are all taxed like CAP cost reductions. Dealer discounts or factory-to-dealer incentives that are reflected in a dealer discount are NOT taxed.
You just have to have an itemization of the upfront charges from the dealer to know what's included and what isn't.
One other item to account for: PA adds 3% to your local sales tax on a lease. If you have a 6% rate, then the sales tax rate on a lease is 9%
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Great thank you so much that really helps my calculations match the dealer estimates!
So far it looks like Kia rolls the aq into the cap cost and Hyundai does the opposite with the doc fee
You can structure the deal any way you want. Our recommendation is to pay the first payment and any government imposed fees at signing and roll the rest into the cap cost and make it part of the monthly payment.
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2015 Subaru Outback 3.6R / 2024 Kia Sportage Hybrid SX Prestige
Thank you. Two followups. If the aquisition fee and doc fee are not taxed up front in PA (I will check come lease time) would it make more sense to pay it upfront rather than roll it and be taxed on it?
And #2 if a dealer buys out your lease and gives you a check for the difference in equity, do you pay tax?
Thank you. Two followups. If the aquisition fee and doc fee are not taxed up front in PA (I will check come lease time) would it make more sense to pay it upfront rather than roll it and be taxed on it?
And #2 if a dealer buys out your lease and gives you a check for the difference in equity, do you pay tax?
The acquisition fee is always taxed.
But, yes, anything that is un-taxed should be paid upfront. If you roll it into the payment, you are subjecting that increase in payment to monthly PA sales tax.
That's a good question on the equity. I'd say untaxed, since you aren't using it as a CAP cost reduction. It probably has to be structured as two separate transactions.
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