VA Car Tax and Leasing Question (for sale, credit, buying)

[BMWZ4RUlz]

So I THINK I know the answer to this but it makes no sense to me...


If you lease a car in VA, do you pay that tax on the full NEW price of the car? If so, that seems like a HUGE deterrent to lease a car in VA. Doesn't this hurt car dealers?


I just wanted to be sure I understood this correctly.

[boyd888]

You pay tax for whatever the negotiated full value of the car is (cap cost), not just the portion you are leasing. So yes it does make leasing not as good as other states. No it does not hurt car dealers because you pay the tax, not them.

[BMWZ4RUlz]

Originally Posted by boyd888

You pay tax for whatever the negotiated full value of the car is (cap cost), not just the portion you are leasing. So yes it does make leasing not as good as other states. No it does not hurt car dealers because you pay the tax, not them.

To be clear-it hurts the dealers because leasing is less attractive to VA residents, that is what I meant.


Wow-we own a place in VA and between the car tax and the crazy 20 mph wreckless driving thing, seriously considering returning to DC or MD.

[Eagle4Life]

I know the joke has been posted many times, but the wreckless driving thing is good.

Also MD has a local income tax, VA has car tax and no local income tax. The governments all get their money somehow. Call it what you want.

[z28lt1]

Just to be clear, there are 2 taxes on leased (and other vehicles). Only one really puts VA at a disadvantage when it comes to leasing.

The personal property tax is paid on the value of the car. I believe every state that has an annual property tax on vehicles taxes leased and owned vehicles the same. Half the states don't have any annual property taxes on vehicles. This shouldn't make leasing any more or less attractive, as it is just a form of tax on value of property you have (and in this case, not own, but is in your possession). I would think you would see a huge percentage of leases on more expensive vehicles if you could avoid much of the personal property tax by leasing, which doesn't make sense for the state and localities, as that is a major form of annual taxation.

The other tax, the Motor Vehicle Sales and Use Tax (which in VA, has different rates than other sales and use taxes), is different in VA than most states on leased vehicles. In VA, you pay that tax up front on the entire value of the car (and no credit for trade-ins in VA). In most other states, you only pay the tax on the payments you make, not the full value of the car. I believe at least Texas is like VA in this regard, and maybe one or two others, but most states don't issue sales tax the full value of the car if you are leasing.

This still doesn't make leasing less attractive than buying in VA, but it does make leasing less attractive than leasing in most other states, and for some only being able to afford payment by payment, paying all the sales tax up front on a lease may be difficult.

I understand that VA gets their taxes differently than other states, and higher vehicle related taxes are in lieu of other taxes. That said, I really hate that VA decided to go that route. Newer cars are safer, more fuel efficient, cleaner, etc... Yet VA does everything they can (personal property tax, ever increasing sales tax (now 4.15%), no trade in credits for sales tax) to encourage people to hang onto their older cars.

[tgbwc]

Originally Posted by dshawg1

To be clear-it hurts the dealers because leasing is less attractive to VA residents, that is what I meant.


Wow-we own a place in VA and between the car tax and the crazy 20 mph wreckless driving thing, seriously considering returning to DC or MD.

If you are so concerned about being charged with reckless driving, maybe it is better for all of us that you don't stay on VA roads.