fansonly

Hello CA folks. When you lease a car, you only have to pay sales tax on the lease portion of the car, correct?

Dealers are trying to tell me I have to pay it on the full value of the car.

Archimedes

I was under the impression that it was only the lease portion of the car, but I'll bet a quick Google search would answer the question. I did a prepaid lease years back and I seem to recall I only payed tax on the portion I was paying for the 3 year lease.

fansonly

Google agrees with me. Just was hoping to hear from other CA residents that have papered a lease in CA recently.

Burren

I lease cars for tax reasons because I can write off the payments, insurance, repairs, etc. through work (self employed) and as a CA resident, you only pay tax on the portion that you are leasing. For instance: 36 month lease on my current BMW daily sees me paying tax only on 36 monthly payments with a residual in the neighborhood of 58%; not the whole value of the car.

States like Texas require you to pay taxes on the whole car, during a lease.

WernerE

CA doesn't have a sales tax trade-in credit, so it's another reason why one should lease instead of purchase or finance, especially if you have a history of turning your cars.

fansonly

Very helpful, thanks. I'm talking to a TX dealer but the lease will be in CA.

spaghettiab

I leased a BMW earlier this year in CA. The way it works is you first calculate your base monthly lease payment based on the capitalized cost, residual, lease term, and money factor. Then you add on a monthly sales tax to your base monthly lease payment. You definitely do not pay sales tax on the entire selling price of the vehicle.

fansonly

Did you have to pay a registration fee for your car? That should be part of the acquisition fee, right?

Burren

Yes, you have to pay the Reg.

fansonly

I would assume thats under $1000. If the dealer comes back with some 2K number, thats bogus, correct?

spaghettiab

Yes, I had to pay a registration fee. The registration fee is a government fee whereas the acquisition fee is not - in the case of my BMW, it is a fee charged by BMW Financial Services.

spaghettiab

Check https://www.dmv.ca.gov/portal/dmv/de...ecalculatorweb to get a sense for what the registration fee should be. If the dealer overcharges you for the reg fee, they are required by law to send you a refund. Be aware that when it comes to the acquisition fee, the dealer can mark it up - I am not sure what the typical Porsche FS lease acquisition fee should be.

reuben991

This is correct. The sales tax is paid on the cost of the lease i.e. if your lease is only $100 per month because you've traded in a car then you pay tax on the $100 per month payment.

If you decide to purchase the car at the end of the lease you'll pay the remaining sales tax.

c_Gio

It is $995 and required on all PFS leases. Or you can NOT pay it and get a slightly higher lease rate factor.

blschaefer1

California resident hear. You only pay sales tax on the lease value itself, not the entire value of the car. One of the significant advantages of leasing here, particularly on a $100k+ purchase that you may only keep for a few years. You also pay sales tax on any captitalized cost reduction (down payment) that you put into the lease up front.