Last post on Nov 14, 2013 at 11:30 AM
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#154 of 194 Re: Taxes on lease [qbrozen]
Feb 19, 2013 (1:27 pm)
I'm positive. Most States compute the tax on the payment streams for which tax is payable as payments are received. However, some States like Ohio and NJ compute tax on the sum of the taxable payments. A taxable payment is computed and that, in turn, is multiplied by the lease term (months). This is the tax base upon which the tax rate is levied. NY does something similar. I've written some articles about this on my website. You may want to look at the following article...
Questions? Please let me know.
I'm not sure what you mean by net payment. The sum of the taxable payments is used only for purposes of establishing the tax base and levying the tax. The actual tax can be capped in the lease. Naturally, the taxable payment will be different than the regular lease payment if tax is capped.
#155 of 194 Re: Taxes on lease [delta737h]
Feb 19, 2013 (2:07 pm)
however, is it true that interest is not charged on the tax? So, in effect, it is the same as paying tax on the payment (even if calculated differently, if the end result is the same, it doesn't matter). As long as interest isn't charged on the tax, there is no benefit paying it up front, which was the poster's question. Correct?
#156 of 194 Re: Taxes on lease [qbrozen]
Feb 19, 2013 (2:25 pm)
If the tax is capitalized, then it will be subject to interest charges as it is included in the gross cap. Below is a lease I constructed almost two years ago in Ohio...
April 11, 2010
2010 Honda Accord LX
Retail Pricing Information
Base MSRP 2010Honda Accord LX AutomaticModel CP2F3AEW
Agreed Upon Value
Amounts Financed (Capitalized)
AHFC Acquisition Fee
Medina Sales Tax 6.50%  36  206.93
Gross Capitalized Cost
Capitalized Cost Reduction
Adjusted Capitalized Cost
Residual Value (Residual Factor Χ MSRP)
Cost of Money/Term
Lease Payment Itemization
Monthly Lease Payment
Taxable Monthly Lease Payment
Estimated Charges Payable at Lease Origination
License, Title, Registration Fees (estimated)
Amount Due at Lease Signing
Fund Provider: AHFC
GAP Coverage: Included
Annual Mileage Allowance: 12k
Disposition Fee: None
Excess Mileage Charge: $0.15 per mile
#157 of 194 Re: Taxes on lease [delta737h]
Feb 19, 2013 (3:01 pm)
This goofy line...
Medina Sales Tax 6.50%  36  206.93
from the above post should read...
Medina Sales Tax 6.50% x 36 x 206.93..... 484.22
PS: Anything that is capitalized in a lease, taxes or otherwise, is going to be charged interest.
#158 of 194 Re: Taxes on lease [delta737h]
Feb 19, 2013 (4:59 pm)
Thanks for all the info. A little over my head.
So paying upfront and paying monthly is essentially the same?
Only asking because I have 2 lease offers: 1 w/ all fees/taxes rolled into monthly payments and the other with much higher upfront costs including tax w/ lower monthly.
the higher upfront cost sounds cheaper in the long run but maybe i'm missing some additional fees.
#159 of 194 Re: Taxes on lease [thngpg3388]
Feb 19, 2013 (6:32 pm)
Given that a car is a depreciating asset and the cost of money is relatively cheap, I wouldn't part with any money upfront. Just roll it in with the lease.
#160 of 194 Re: Taxes on lease [delta737h]
Feb 19, 2013 (7:26 pm)
Thanks for the advice!
#161 of 194 Re: Taxes on lease [delta737h]
Feb 20, 2013 (11:09 am)
I don't believe the tax is capitalized in NJ. At least, I can't find any evidence that supports that.
So that OH lease you pasted, I can see that, if interest wasn't charged on the tax, the payment would be about 60 cents less. AFAIK, if you did that same lease in NJ, the payment would be $220.38.
Maybe I'll see if my sister can bring over her lease contracts we did a few weeks ago so I can take a look.
#162 of 194 Re: Taxes on lease [qbrozen]
Feb 20, 2013 (11:27 am)
Tax can be capitalized at the lessee's request. I have constructed several lease proposals for individuals in the State of NJ over the past three (3) years and have never had a problem with any of the NJ dealerships doing this. They really don't care and neither does the State of NJ. Either way, NJ will receive the tax payment upfront. The fund provider simply advances the dealer the cash to pay the taxes and the lessee re-pays the tax, included in their lease payment, over the term of the lease.
If you have any questions about the lease contract, please let me know.
I'll be glad to address them.
#163 of 194 Need Help with Payment
Feb 20, 2013 (1:26 pm)
I received an offer from a Volkswagen dealer on a 2013 CC
Sell price 29576
Payment of $479/month with $1000 down + fees.
Is this a good deal??