[Vmaxx]

I live in Texas, which means I paid taxes on the total vehicle price, not the leased amount or monthly payment, but my dealer is telling me I have to pay taxes again if I decide to buy the vehicle. I also called BMWFS for their financing options and they also stated taxes added to the residual amount (buyout price). Does anyone know if this is accurate? Doesn’t make sense if my contract states I’ve paid taxes on full amount already. Anyone with experience on lease buyouts have any insight?

[AM340iMiami]

Maybe you’ve paid taxes on the total lease payments? Not the agreed upon lease buyout value?

Maybe you can pull up your lease contract and look at the terms and work it out.

[Vmaxx]

Originally Posted by AM340iMiami

Maybe you’ve paid taxes on the total lease payments? Not the agreed upon lease buyout value?

Maybe you can pull up your lease contract and look at the terms and work it out.

No, in Texas we pay taxes on the full sales price of the vehicle. For example, let’s say you were leasing another G20 and the msrp was 65k, but you negotiated the sales price to 60k, we pay taxes on the 60k here in Texas. And let’s also say the residual amount (lease buyout amount) is 40k. Now they’re asking me to pay taxes on the 40k, which would mean I’m paying taxes on $100k for a 60k car.

[AM340iMiami]

That sounds wrong to me. I can see your concerns. Would like to see how this plays out. My wife just bought out her end of lease Mazda. I’m going to see how Florida does it.

[TurtleBoy]

Originally Posted by Vmaxx

No, in Texas we pay taxes on the full sales price of the vehicle. For example, let’s say you were leasing another G20 and the msrp was 65k, but you negotiated the sales price to 60k, we pay taxes on the 60k here in Texas. And let’s also say the residual amount (lease buyout amount) is 40k. Now they’re asking me to pay taxes on the 40k, which would mean I’m paying taxes on $100k for a 60k car.

Unfortunately that is the way taxes work on leases in Texas. It is why many people do not lease in Texas and they use programs like BMW's Owners Choice to get around the double taxation.

Edit: In case anyone wants some information on the Owner's Choice. https://www.bmwusa.com/financial-ser...g-program.html

[Vmaxx]

Originally Posted by TurtleBoy

Unfortunately that is the way taxes work on leases in Texas. It is why many people do not lease in Texas and they use programs like BMW's Owners Choice to get around the double taxation.

Edit: In case anyone wants some information on the Owner's Choice. https://www.bmwusa.com/financial-ser...g-program.html

Thanks for the information on Owner’s Choice. Something to consider for next time. What’s frustrating is the Texas Comptroller’s office contradicts itself with regards to taxes on a lease. If taxes are paid on the full purchase price of the vehicle and I’m simply exercising the option to buyout the lease it doesn’t make sense to be charged taxes again.

[TurtleBoy]

Originally Posted by Vmaxx

Thanks for the information on Owner’s Choice. Something to consider for next time. What’s frustrating is the Texas Comptroller’s office contradicts itself with regards to taxes on a lease. If taxes are paid on the full purchase price of the vehicle and I’m simply exercising the option to buyout the lease it doesn’t make sense to be charged taxes again.

It is a transactional tax so both of those are treated as separate transactions hence the tax due on each.

[Vmaxx]

Originally Posted by TurtleBoy

It is a transactional tax so both of those are treated as separate transactions hence the tax due on each.

How does Owner’s Choice manage to bypass that? The balloon payment at the end doesn’t seem much different.

[TurtleBoy]

Originally Posted by Vmaxx

How does Owner’s Choice manage to bypass that? The balloon payment at the end doesn’t seem much different.

It is all one transaction since you are the owner from the beginning. Paying off a loan is not a change in ownership.