Lease Negotiation GT2

[RTar17]

The dealer, I am in negotiations with, mentioned something about tax on the lease cash. Is that correct? it didn't seem right to me.

 

[MerlintheMad]

Hi.
I haven't read of a specific tax levied on the lease incentive/cash.

 

[Rob M]

Yes, in most US states the tax is charged on the negotiated price of the vehicle, before rebates are considered.

 

[RTar17]

Yes, in most US states the tax is charged on the negotiated price of the vehicle, before rebates are considered.

I understand the taxes on the amount being leased over the 2 years (in this case). I have never leased a car with lease cash given, but I got the impression there is an additional tax on the $8500 lease cash. Is that correct? Thanks

 

[Rob M]

I understand the taxes on the amount being leased over the 2 years (in this case). I have never leased a car with lease cash given, but I got the impression there is an additional tax on the $8500 lease cash. Is that correct? Thanks

Here' a hypothetical simplified example. Let's say the agreed upon price is $50k before rebate which is then reduced by a $10k rebate. Let's also pretend the residual after lease term is $30k, and that your state has a 5% sales tax imposed only on the life of the vehicle you use. In this case, your lease payments (rent plus interest) would be $40k - 30k = $10k spread over the lease term. But the tax would be ($50k - $30k) × .05 = $1k. So, in your case, yes, you pay sales tax on the $8500.