Leasing an automobile in TX. (sales, credit, to buy)

[2austin]

We are considering leasing a car this year in Texas.

We have leased 2 cars before moving to TX and to our surprise have been told that in TX, the leasee is required to pay sales tax on the "entire" value of the vehicle instead of paying taxes on monthly lease payments. Furthermore, at the end of the lease if we want to purchase the vehicle, we have to pay sales tax "again" on the residual value.

So for a 30K car at 8.25% sales tax, the initial tax is approx $2500
If the residual value at the end of lease is say $20K and we want to buy it we have to pay additional $1600. This is ridiculous!

Am I missing something here?

[FromCalitoSteinerRanch]

Originally Posted by 2austin

We are considering leasing a car this year in Texas.

We have leased 2 cars before moving to TX and to our surprise have been told that in TX, the leasee is required to pay sales tax on the "entire" value of the vehicle instead of paying taxes on monthly lease payments. Furthermore, at the end of the lease if we want to purchase the vehicle, we have to pay sales tax "again" on the residual value.

So for a 30K car at 8.25% sales tax, the initial tax is approx $2500
If the residual value at the end of lease is say $20K and we want to buy it we have to pay additional $1600. This is ridiculous!

Am I missing something here?

It may not be much, but I believe it would be subject to only 6.25%. If your assumptions are correct, then it will still be a bite.

[dannyw29]

no, not true,, Lease Companys have tax credits which will eliminate Taxes. It's calles L&M. also the tax rate in Texas is 6.25%

You would only pay tax on the residual if you purchased the car at the end of the lease.
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