Understanding CT sales tax in dealer lease quote

taybins

Hi - would like a sanity check here. I've been quoted a lease that includes capitalized tax, which is (in CT) 7.75% of the leased value of the car, which equals adjusted cap cost minus residual.

Separately, the dealer includes a "use tax", which is 7.75% of the base lease payments (most of which is to pay back the depreciation cost).

Now, how is this not being taxed twice on the same amount? Thank you.

kyfdx

taybins said:

Hi - would like a sanity check here. I've been quoted a lease that includes capitalized tax, which is (in CT) 7.75% of the leased value of the car, which equals adjusted cap cost minus residual.

Separately, the dealer includes a "use tax", which is 7.75% of the base lease payments (most of which is to pay back the depreciation cost).

Now, how is this not being taxed twice on the same amount? Thank you.

The only capitalized tax would be on CAP cost reductions.
The 7.75% is a use tax, collected on the payment monthly.

There may be a line that shows "total tax", but that's for informational purposes. It isn't a separate line item. If you add up the numbers, you'll probably find the "use tax" line is just the total of the monthly tax amounts.

taybins

Thank you.

That confirms that the dealers I'm speaking to are trying to fleece me. They include a line item called "Tax" inside their capitalized cost adjustment, which is 7.75% of the adjusted cap minus residual + 7.75% of fees. Then, they include another line item called "use tax" that is 7.75% of the "base" (meaning "before tax") monthly payments. So, they are trying to charge 7.75% twice on the same amount.

In other words, their line item is not simply informational.

taybins

Michaell

taybins said:

The $990 is the tax on the rebates; the second is the tax on the monthly payments.

kyfdx

taybins said:

What @Michaell said: As noted in my previous reply, CAP reductions are taxed upfront.

Sales tax is the last place a dealer will try to add money. The risks are too great.

taybins

Thank you so much. I understand this more clearly now.

bhmr59

CT sales tax is 6.35% except in restaurants & bars where it is 7.35%.