A taxing question...

Brett · 07-13-2006, 02:07 AM

Lets keep things simple:

Say the MSRP is $50,000.00 and tax rate is 10%. And you do NOT pay the tax up front. In regards to taxes, for leasing...

Do you owe a flat $5,000.00 divided over the term of the lease,
Or do you determine lease payment with $55,000.00 Net Cost,
Or do you owe lease payment + 10% tax rate for that payment

My Coupe Calculator does it the second way, but I saw another calculator on Bimmerfest that does it the third way. The third way only has you pay tax for your payments, not for the full MSRP.

Thanks,
-Brett

Joe Bimmer · 07-13-2006, 09:19 AM

My guess is that they will treat it like a $55,000 net cost. Your effective tax rate will increase due to the money factor of the lease. I could be wrong though.

Gitta · 07-13-2006, 12:03 PM

I think each state may treat this differently. In PA you pay 50k for the car and then pay sales tax on the monthly "rental fee".

BigPapiDoesItAgain · 07-13-2006, 11:14 PM

Here in Louisiana one pays a monthly "usage tax" which amounts to the local sales tax on the calculated payment only - not the capitalized cost of the car, but rather the calculated monthly payment + money factor. Off the top of my head the lease is roughly the net capitalized cost (negotiated price) minus the residual + the MF (interest rate). This is the amount that is taxed, and divided by the term of the lease, and added to each payment. I'm not a financial guy, and this is probably over simplifying, but I think this is roughly how it works here.

07-13-2006, 02:07 AM	#1
Brett Captain 24 Rep 748 Posts Drives: 2000 BMW 323 CiC Join Date: Oct 2005 Location: Atlanta iTrader: (0)	A taxing question... Lets keep things simple: Say the MSRP is $50,000.00 and tax rate is 10%. And you do NOT pay the tax up front. In regards to taxes, for leasing... Do you owe a flat $5,000.00 divided over the term of the lease, Or do you determine lease payment with $55,000.00 Net Cost, Or do you owe lease payment + 10% tax rate for that payment My Coupe Calculator does it the second way, but I saw another calculator on Bimmerfest that does it the third way. The third way only has you pay tax for your payments, not for the full MSRP. Thanks, -Brett
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07-13-2006, 09:19 AM	#2
Joe Bimmer Lieutenant 13 Rep 548 Posts Drives: Alpine White 2015 X5 x35i Join Date: May 2006 Location: Austin, TX iTrader: (0) Garage List 2006 325i [0.00]	My guess is that they will treat it like a $55,000 net cost. Your effective tax rate will increase due to the money factor of the lease. I could be wrong though.
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07-13-2006, 12:03 PM	#3
Gitta Kelly's 330i 11 Rep 413 Posts Drives: 330i Join Date: Feb 2006 Location: E PA iTrader: (0) Garage List 2006 330i (current ... [0.00] 2006 330i (new) [0.00] 2006 330i (interior) [0.00]	I think each state may treat this differently. In PA you pay 50k for the car and then pay sales tax on the monthly "rental fee". __________________ '06 330ix \| 6MT \| TS-BDL-BW \| ZSP \| ZPP \| heated seats \|... mods \| cf splitters painted TiAg \| spoiler \| blacklines \| short shift knob \| cf trim \| *** winter setup: 17" ASA JH3 & Dunlop WinterSport M3 DSST * . '01 325xi \| auto \| TS-GDL-BW \| ZPP \| heated seats \|........... mods** \| spoiler \| mudguards \| blackout grills \| clear lights \| halo projector headlights \|
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07-13-2006, 11:14 PM	#4
BigPapiDoesItAgain Private 2 Rep 51 Posts Drives: 2019 Porsche Cayenne Base Join Date: Oct 2005 Location: Shreveport, LA iTrader: (0)	Here in Louisiana one pays a monthly "usage tax" which amounts to the local sales tax on the calculated payment only - not the capitalized cost of the car, but rather the calculated monthly payment + money factor. Off the top of my head the lease is roughly the net capitalized cost (negotiated price) minus the residual + the MF (interest rate). This is the amount that is taxed, and divided by the term of the lease, and added to each payment. I'm not a financial guy, and this is probably over simplifying, but I think this is roughly how it works here.
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