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Smart Shopper Smart Shopper-Archives Any Questions for a Car Dealer? 
16377 messages, Last post on Feb 11, 2006 at 4:59 AM
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Replying to: exb0 (Jan 21, 2006 5:28 pm) On your trade - the lease for example - you already paid the full tax on the original sales price back when you took the lease out; e.g. $25000 transaction price x 3% = $750 taxes paid . Thus when you 'trade' it in or if you were to buy it outright you dont owe any taxes. Therefore if you have positive equity vis-a-vis the residual value it's just pure cash in your pocket or additional downpayment. No taxes due.
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I am looking to trade my Accord on an Odyssey. I would expect that their will be about $10K difference between my trade value and the Ody price. I am planning on leasing the Ody. When calculating my lease payments I should expect to pay taxes only on the $10 K. Is that correct?? Thanks for any info.
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Replying to: steine13 (Jan 21, 2006 3:16 pm) All I'm saying is for a low/no profit deal it just isn't worth the trouble and risks. |
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| I think it depends on the state, I looked into this recently in NJ, and was told by the dealer that I would NOT received a tax credit for my trade in against a lease, only on a urchase. Really not sure of the nuances, but your best bet is to ask the finance manager at the Honda dealer, since they wil know the specific rules in your state. | |
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Replying to: kdhspyder (Jan 21, 2006 9:46 pm) Your answer makes a lot of sense, however, I am confused.  The reason I am confused is because when I leased my wife’s Odyssey, the salesman told me that I have to pay full tax on the original sales price at the origination of the lease, and if I decide to purchase the van at the end of the lease, I will have to pay sales tax again on the residual value. I guess the salesman who sold me the van was “confused”. |
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| With a lease, you pay tax as you go with every lease payment. If you choose to buy it at lease end, you pay tax on the residual. | |
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Replying to: isellhondas (Jan 22, 2006 10:22 am)
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Replying to: volvodan1 (Jan 22, 2006 11:11 am) |
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Replying to: volvodan1 (Jan 22, 2006 11:11 am) And if you live in the City of Chicago, you get to pay both city and county taxes on a new car lease. I don't know what the rates are today but 10yrs ago that meant you paid 13% sales tax on a LEASED vehicle. Oh, and the city charged you a wheel tax of $90/yr (that one has prolly gone up too). Welcome to Illinois!!!!
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Replying to: bretfraz (Jan 22, 2006 11:45 am)  USA Today So if you really pay double on the lease residual that is effectively 18%! |
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