Paying Taxes again when you buy after your Lease

[tigger19687]

I was just talking to a dealer about the E-golf and he was saying that you pay taxes if you buy the car AFTER your lease !!????

Not sure if that is just in MASS or everywhere. But WHY in the world would you want to pay taxes TWICE on the same car ?
That doesn't even make sense to me.
If I paid taxes on this car for USE, and then buy it, I have already Paid a tax and should not have to pay again.


I wonder if this guy was miss informed.

Anyone know about this ?

 

[LAeGolf]

As I understand, in California (Los Angeles), if you lease you only pay taxes on your monthly payment. So if your payment is $300 your total monthly payment will be $330 (I may be off by a few dollars); so over 3 years you're paying about $1,100 in taxes. If you bought it, again in Los Angeles, you'd pay about $3,500 in taxes (about 10% of the MSRP).

Now if you purchase the car at the end of the 3 years, it's still a "purchase" subject to tax. But at that point you're only paying tax on the purchase price at that time, which is the residual value - $14,500.

However, I would guess that by 2018 the "next-gen" batteries will be here, and the same e-Golf will (hopefully) have 150+ miles of range.

 

[GetOffYourGas]

When you lease a car, you essentially agree to pay for the purchase price minus the residual. You pay taxes on the portion that you are paying. When you buy, you then pay taxes on the residual. So therefore you are paying taxes "twice", but each time you are only paying a portion of the tax. Together, they add up to 100% of the taxes you would pay if you purchase upfront.

Say the car cost $30,000, the residual is 50% ($15,000), and tax is 8%.

Lease:
You agree to pay $15,000 over 3 years. You pay 8% tax on $15,000, or $1,200.
You buy the car for residual ($15,000), on which you pay 8% tax. Another $1,200.

Buy:
You agree to buy out right for $30,000. You pay tax once, 8% of $30,000. $2,400.

It's a case of pay me now, or pay me later.

 

[tigger19687]

Ah, I see. He didn't say all that.

I get the point of the 2018 may have more mileage then now.
By then my Daughter will be driving and I will give her the lesser car.


She thinks she will be getting my F-350 Diesel HAHAHAHA not