QUIKAG

Rio,

Didn't PM because I thought others would be interested. When you lease your S2000, you pay sales tax on the entire purchase price, not just the lease amount. I understood that.

However, I found out this evening, that if buy the car before the end of the lease for the buy out price, you need to pay sales tax on the buy out price. So, technically you pay sales tax TWICE (at least on the second amount)

Additionally, if you try to trade in your S2000, you WILL NOT receive a credit for the trade-in value against the sales tax amount. Meaning, normally you buy a $30k and trade in a $10k car that you own outright, you only have to pay sales tax on $20k. However, it seems with a Honda lease (since Honda Lease Trust OWNS the tax credit), if you trade in your $20k S2000 and buy a $40k car (apparently a car other than a Honda/Acura), you have to pay sales tax on the whole $40k.

This totally surprised me. Rio, please confirm the above is factual information.

Thanks,
Corey

rioyellows2k

True and not true.

If you purchase your lease anytime (during your lease, or at the end of term) you are required to pay sales tax again (only on the residual/payoff amount though)...

If you trade in your lease you are still eligible to recieve the "sales tax" credit. The dealer just has to report it properly. Some abide, some don't.

The leasing company takes the "sales tax paid" and keeps them to use for tax credits throughout the year. Meaning the Sales tax can be credited off your lease contract, and substitued for the L&M Fee/Tax that the leasing company sets.

QUIKAG

Thanks, Rio. I was told yesterday that I would not be able to apply the trade-in value as a sales tax credit because Honda Lease Trust retains it as a tax credit.

If you could provide some further clarification, I will buy you lunch/beer where ever you want! I will PM you my phone number if you are willing to talk on the phone as well.

QUIKAG

Okay, called Honda Financial Services and spoke with a tax attorney friend.

I am SOL. To buy the car, I pay sales tax on the residual or buy out price.

To trade in the car, since Honda Financial Services owns the car, the dealership that took the "trade" would actually just buy the car outright from HFS. It wouldn't be considered a trade. As such, there is no sales tax credit for the "trade-in value" <---using that term loosely. The only benefit to trading in the car is that I wouldn't have to pay sales tax on the buy out price. I would have to pay all the sales tax on the new car, of course.

So, that sucks. Beware if you are considering leasing and may want to get rid of the car early.

In summary, I am keeping my S2000 and also getting the wife a new ride without a "trade-in." So, I'm happy in the end because I get to keep my silver ninja for another 10 months.

mxt_77

Leases FTL.

rioyellows2k

Uhhh....that's not right.

Here's what I did when I leased my Acura:

My Wife's 07 Civic was Leased, My '06 Civic Was Financed

I got $37,000 Trade in for Both Cars.

The TSX I bought I paid $28,000. I leased the TSX

I paid $0. In Sales tax. and $0 in L&M Tax since the trades exceeded my purchase price.


When I Bought the S, I traded the Acura for $25,000, and Paid $26,256 for my '07. I paid Sales Tax on $1,256 or $78.50 for Sales tax.

I've leased plenty of cars, and I've never lost my sales tax credit when trading in.

And Leasing kicks ass if you're anything like me.

rioyellows2k

Maybe that's the answer Honda Finance is supposed to give you, but that's not what's practiced.

QUIKAG

Have you tried recently to trade from a Honda/Acura to a vehicle that is not a Honda/Acura? If not, then I don't think it applies to you.

Honda/Acura Lease Trust will apply the tax credit if you are leasing or buying another Honda/Acura vehicle. Otherwise, I think you're SOL.

If you have, please let me know specifics because I am getting answers that do not align with yours and I wish yours end up being the right one!

rioyellows2k

I only Roll Honda/Acura products.

But My boss traded is Leased Tahoe to our dealership, and via in/out traded it to Park Place Lexus Grapevine and got his tax credit.

What kind of car are you getting?

QUIKAG

Scott,

I appreciate the info, but at this point, I'm going to keep the S2000 until the end of the lease and just enjoy it alongside the IS300. My wife is getting an '08 RX350 coincidentally from Park Place Lexus Grapevine.

I signed the papers today, it's an straight purchase and she better enjoy it for the next 10 years. It should arrive off the boat/truck in the next 3-4 days.

However, if Bankston wanted to buy my car from me and do an in/out with Park Place Lexus and give me a fair price, we could work something out.