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BMW M5 F90 (2018+) General Forums F90 M5 Pricing, Ordering, Tracking, and European Delivery    So, today I learned on a lease transfer...

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      07-17-2019, 09:09 AM   #1
zirotti
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So, today I learned on a lease transfer...

...that depending on your state, make sure to do your homework on whether or not you will be assessed tax on your vehicle when you go to register it.

This seems common sense in retrospect, because obviously when I've leased vehicles in the past, there has always been some type of tax either on the sales price (TX) or the monthly payment (MI).

I was close to assuming a lease from a person in another state (not TX) where his sales tax was taxed on the sales price but rolled into his monthly payments with BMW FS. When I called the Texas Comptroller, they told me that I would have to pay upfront sales tax on the fair market value of the vehicle upon registration, which would be about $6,000. So I would be assuming the taxes already rolled into the monthly payment plus having to write a check to the state of TX.

So what turned out to be a smoking hot deal turns out to be only a few dollars less than me just ordering my own car.

I've been reading on lease assumptions for awhile now and surprisingly never saw this called out. So I figured I would vent my frustrations while hopefully drawing someones attention to this as well.

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      07-17-2019, 12:59 PM   #2
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Some states collect the taxes upfront, others monthly. My state (NC) rolls the taxes into the payment. When you assume the lease you don't assume the itemized tax portion of the previous lessee's payment, only the principal and interest.
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      07-17-2019, 01:13 PM   #3
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in Pennsylvania you get taxed on monthly payment and when you transfer a lease
the person will follow his state lease criteria
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      07-21-2019, 03:12 AM   #4
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OP, Texas residents usually look to assume leased vehicles registered in Texas for this exact reason. That's the only way to avoid paying double sales tax on leases in Texas.
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      07-21-2019, 11:57 PM   #5
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Quote:
Originally Posted by paliknight View Post
OP, Texas residents usually look to assume leased vehicles registered in Texas for this exact reason. That's the only way to avoid paying double sales tax on leases in Texas.
Yep and now I know.
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      07-27-2019, 08:13 AM   #6
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Yep, it's even worse in Texas than your post indicates because Texas actually charges tax on the full purchase price amount of the car, not the current fair market value. So they look at the bill of sale from the original Lessee and charge you the tax on the full amount of the purchase price the original lessee paid. You do get credit for taxes the original lessee paid in their state, but that's usually peanuts compared to Texas taxes owed because most states only charge taxes on the monthly payment amount or the amount of depreciation during the lease term.

You really have to do your homework and make sure you know what's up before pulling the trigger on a lease deal from out of state. I've done it and it worked out great, but I knew all the implications and ran the math to make sure I knew exactly what to expect at the DMV.
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      07-27-2019, 08:27 AM   #7
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Quote:
Originally Posted by platinum903 View Post
Yep, it's even worse in Texas than your post indicates because Texas actually charges tax on the full purchase price amount of the car, not the current fair market value. So they look at the bill of sale from the original Lessee and charge you the tax on the full amount of the purchase price the original lessee paid. You do get credit for taxes the original lessee paid in their state, but that's usually peanuts compared to Texas taxes owed because most states only charge taxes on the monthly payment amount or the amount of depreciation during the lease term.

You really have to do your homework and make sure you know what's up before pulling the trigger on a lease deal from out of state. I've done it and it worked out great, but I knew all the implications and ran the math to make sure I knew exactly what to expect at the DMV.
I am going to assume that doesn't happen when we do a lease transfer within Texas, right?
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      07-28-2019, 11:18 PM   #8
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Quote:
Originally Posted by zirotti View Post
I am going to assume that doesn't happen when we do a lease transfer within Texas, right?
Correct. If the car was originally leased in Texas, then taxes were paid at the time of lease inception and nothing is owed when you go to register outside of the standard registration fee which is less than $100.
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      08-08-2019, 05:27 PM   #9
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Quote:
Originally Posted by platinum903 View Post
Yep, it's even worse in Texas than your post indicates because Texas actually charges tax on the full purchase price amount of the car, not the current fair market value. So they look at the bill of sale from the original Lessee and charge you the tax on the full amount of the purchase price the original lessee paid. You do get credit for taxes the original lessee paid in their state, but that's usually peanuts compared to Texas taxes owed because most states only charge taxes on the monthly payment amount or the amount of depreciation during the lease term.

You really have to do your homework and make sure you know what's up before pulling the trigger on a lease deal from out of state. I've done it and it worked out great, but I knew all the implications and ran the math to make sure I knew exactly what to expect at the DMV.
You're saying, hypothetically, if someone paid 8.25% tax on their lease in a different state, then you don't pay any taxes in Texas, correct?
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      08-08-2019, 07:34 PM   #10
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Quote:
Originally Posted by paliknight View Post
You're saying, hypothetically, if someone paid 8.25% tax on their lease in a different state, then you don't pay any taxes in Texas, correct?
No, you then have to pay the use tax in Texas again, up front when you register the vehicle, so its double taxation.
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      08-13-2019, 08:14 AM   #11
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Quote:
Originally Posted by platinum903 View Post
Yep, it's even worse in Texas than your post indicates because Texas actually charges tax on the full purchase price amount of the car, not the current fair market value. So they look at the bill of sale from the original Lessee and charge you the tax on the full amount of the purchase price the original lessee paid. You do get credit for taxes the original lessee paid in their state, but that's usually peanuts compared to Texas taxes owed because most states only charge taxes on the monthly payment amount or the amount of depreciation during the lease term.

You really have to do your homework and make sure you know what's up before pulling the trigger on a lease deal from out of state. I've done it and it worked out great, but I knew all the implications and ran the math to make sure I knew exactly what to expect at the DMV.

Maryland is the same way they charge sales tax on the full price of the vehicle regardless of when it was purchase. I had leased my car in VA then when it expired I was going to register in Maryland until they told me I would have to pay the taxes again. So I didn't and didn't register the car...
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      08-25-2019, 09:22 PM   #12
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GA is the same as Texas. Bring in a leased car titled in another state and you will pay big💰.
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