[ProV1]

How does Maryland get away with:

1. Charging full 6% sales tax up front on leased cars, not based on the monthly payment

2. Charging 6% tax AGAIN on the same car if you decide to buy it at lease end.


WTF???

[overcoil]

are you sure ?

[Delta0311]

Originally Posted by ProV1

How does Maryland get away with:

1. Charging full 6% sales tax up front on leased cars, not based on the monthly payment

2. Charging 6% tax AGAIN on the same car if you decide to buy it at lease end.


WTF???

Get the fuck out!! That's double taxation.

[csu87]

Originally Posted by ProV1

How does Maryland get away with:

1. Charging full 6% sales tax up front on leased cars, not based on the monthly payment

2. Charging 6% tax AGAIN on the same car if you decide to buy it at lease end.


WTF???

You always pay the full amount of sales tax on the total amount of payments, it is just either broken up into the monthly payment or paid in full.

Are you saying they are charging you 6% of the cars purchase value up front instead of the amount of payments?

And yes, since you are then PURCHASING the car, you get taxed on that value.

[ipilcher]

Originally Posted by Delta0311

Get the fuck out!! That's double taxation.

And?

There's nothing illegal about double- (or triple-, quadruple-, quintuple-, etc.) taxation.

[hellrotm]

Texas is the same way. On a lease you get taxed on full sales price of the vehicle. Then if you decide to buy out at end of the lease. You pay taxes again on buyout price.

[Doc Oc]

Damn that is nuts. In S.C it is capped at $300.

[sygazelle]

Originally Posted by ProV1

How does Maryland get away with:

1. Charging full 6% sales tax up front on leased cars, not based on the monthly payment

2. Charging 6% tax AGAIN on the same car if you decide to buy it at lease end.


WTF???

Its the same car, but not the same owner. The first time you are paying sales tax as a lessee on behalf of the lessor. At the end of the lease and you buy the car it is a separate, taxable transaction to change ownership. Every time a car is sold it is subject to sales tax. Not pleasant but it does make sense.

[hellrotm]

Originally Posted by sygazelle

Its the same car, but not the same owner. The first time you are paying sales tax as a lessee on behalf of the lessor. At the end of the lease and you buy the car it is a separate, taxable transaction to change ownership. Every time a car is sold it is subject to sales tax. Not pleasant but it does make sense.

Where it is different from most states is how much tax is being paid. Most states you only pay tax on the value/amount of car used during the maturity of the lease.

It Texas for example if you buy a $40k with residual of 50%, you pay taxes on full $40k. Either pay up front or divide it over life of the lease. Then when you buy the car out, you pay tax again on $20k(50%). So you are paying taxes on $60k if you lease and then decide to buy the car out.

Most states during the lease you would only pay taxes on $20k(50% residual), divided through the life of the lease.

[Efthreeoh]

Maryland has a rain tax too.

[sebringsc]

Illinois just got rid of this "double taxation" earlier this year. I never understood why anyone would lease, especially with tax around 10% in Chicago. This certainly kept me from leasing in the past.

[derryck]

And you don't only pay sales tax on the difference when trading in a leased vehicle. Leases are great for high residual vehicles like Lexus but are rarely worth it in the end for lower residual cars.

[fecurtis]

Originally Posted by ProV1

How does Maryland get away with:

1. Charging full 6% sales tax up front on leased cars, not based on the monthly payment

2. Charging 6% tax AGAIN on the same car if you decide to buy it at lease end.


WTF???

Because it's Maryland.

At least it's 4% in VA. Although I'm not quite sure I understand what you mean on point number 1. The sales tax in most states for a leased car is based on the cap cost. I know in Virginia on a leased car, you pay the 4% on the full value of the car anyway.

Then on top of that I pay property tax every year on the appraised value of my car.

[ShocknAwe]

Originally Posted by Doc Oc

Damn that is nuts. In S.C it is capped at $300.

Think it's about the only good thing about SC taxes though...

[Red Bread]

Originally Posted by BlackJetE90

Texas is the same way. On a lease you get taxed on full sales price of the vehicle. Then if you decide to buy out at end of the lease. You pay taxes again on buyout price.

Yep, dealing with this now. Thanks BMW for not making an F series car that's worth buying.

[Doc Oc]

Originally Posted by ShocknAwe

Think it's about the only good thing about SC taxes though...

You can take out the word taxes in your statement

[Dattebayo]

Well for such states, the BMW Select program is better than leasing. It is basically leasing, but done so as a finance, as you are only financing a portion of the vehicle and have a balloon payment at the end. BMW mainly designed this program for such states where such taxation is a problem. The only thing is that would be different than a lease is that you would either trade or sell the vehicle before the balloon payment is due.

[sygazelle]

Originally Posted by Red Bread

Yep, dealing with this now. Thanks BMW for not making an F series car that's worth buying.

Thank you!

To think I was reading this thread simply to learn about sales tax and leasing and I saw your valuable, yet irrelevant trolst to let us F3x owners know that our cars are not worth buying.

I'm going to sell mine today while I can still get something for it. Once the news of your post gets out and the market finds out that F series cars aren't worth buying the prices will drop like rocks. I just hope I can sell mine before the crash begins. Man I'm glad I read your post. I love learning new things.

[Red Bread]

Originally Posted by sygazelle

Thank you!

To think I was reading this thread simply to learn about sales tax and leasing and I saw your valuable, yet irrelevant trolst to let us F3x owners know that our cars are not worth buying.

I'm going to sell mine today while I can still get something for it. Once the news of your post gets out and the market finds out that F series cars aren't worth buying the prices will drop like rocks. I just hope I can sell mine before the crash begins. Man I'm glad I read your post. I love learning new things.

I commented on Texas having double taxation on leased cars. But you added value about that earlier.

Sorry I don't like your car, can't imagine how that effects your enjoyment of it.

Actually I might even like your car, it's just that BMW USA doesn't let me have what I'd want. A rwd F31 340i with a manual.

[David70]

Originally Posted by Dattebayo

Well for such states, the BMW Select program is better than leasing. It is basically leasing, but done so as a finance, as you are only financing a portion of the vehicle and have a balloon payment at the end. BMW mainly designed this program for such states where such taxation is a problem. The only thing is that would be different than a lease is that you would either trade or sell the vehicle before the balloon payment is due.

Seems like you might as well just finance if for 72 or 84 months and skip having to deal with it half way through. The benefits of the lease are gone and when the initial time period runs out you will need to sell or refinance it, same thing you could do with the really long loan, just sell it when you want to.

I don't see how it is "basically like leasing". Lease gives a guaranteed residual, car value takes a dive and it isn't your problem, when it is over you take it back and problem is gone, do regular maintenance, make payments and regardless of how much of a problem the car is or accidents or whatever happens your problems go away with the lease term. Besides this also giving a low payment they don't seem to be the same to me.

[Dattebayo]

Originally Posted by David70

Seems like you might as well just finance if for 72 or 84 months and skip having to deal with it half way through. The benefits of the lease are gone and when the initial time period runs out you will need to sell or refinance it, same thing you could do with the really long loan, just sell it when you want to.

I don't see how it is "basically like leasing". Lease gives a guaranteed residual, car value takes a dive and it isn't your problem, when it is over you take it back and problem is gone, do regular maintenance, make payments and regardless of how much of a problem the car is or accidents or whatever happens your problems go away with the lease term. Besides this also giving a low payment they don't seem to be the same to me.

Well for one, it is similar to lease to where your initial capital investment is much less than any down payment on a loan for the car. Also the monthly payment is quite a bit lower, my BMW Select payment is lower than even the lease rate of the car. MY BMW Select is for 5 years with a balloon of about $15000. I have owned 5 BMWs in my lifetime and a 5 year old BMW never has a lower residual than $15000. If anything, I feel the Select Program is better in certain ways as you aren't locked into a term. If you wanted to sell the car the day after you purchase it or a few months or years later, you aren't bound by the lease term.

[Nitrousbird]

I've never understood leasing...it's like having a long term rental car. I like knowing at the end of those payments the car is mine. It's great not having a car payment.