REWahoo
Give me a museum and I'll fill it. (Picasso) Give
Most of you are familiar with my ongoing “101 reasons you don’t want to move to Texas” rant. I just discovered reason number 102.
My BIL and his spouse recently retired and moved from Ohio to Texas. One of their two vehicles is a lease and he got a very nasty surprise when he transferred his registration to his new state of residence.
In most (all other?) states, if you lease a vehicle you pay sales tax on the difference between the sales price and the projected residual value when your lease expires. Not so in Texas, where sales tax is charged on the full sales price of the vehicle when you lease it. BIL learned this when the lady at the county tax office looked at his application paperwork and said, “Uh oh, registering a vehicle leased out of state. Sir, you aren’t going to have a good day.” And after he paid over $1,300 in taxes for license plates on his leased car, she was right.
To add insult to injury, if you decide you want to purchase a vehicle at the end of a lease, the state charges you sales tax again on the purchase price of the used vehicle. They get away with this using the following logic: The sales tax on the original lease was charged to the lessor, not the lessee. Therefore you aren’t being taxed twice for the same vehicle. Of course no leasing company is going to eat the cost of the sales tax so they pass it along to you in the lease payments. Result: you pay sales tax twice on the same vehicle, once when it was new, and again when it is sold as used.
A perfect example of sticking it to you at both ends…and why leasing is a lousy idea, especially in TX.
My BIL and his spouse recently retired and moved from Ohio to Texas. One of their two vehicles is a lease and he got a very nasty surprise when he transferred his registration to his new state of residence.
In most (all other?) states, if you lease a vehicle you pay sales tax on the difference between the sales price and the projected residual value when your lease expires. Not so in Texas, where sales tax is charged on the full sales price of the vehicle when you lease it. BIL learned this when the lady at the county tax office looked at his application paperwork and said, “Uh oh, registering a vehicle leased out of state. Sir, you aren’t going to have a good day.” And after he paid over $1,300 in taxes for license plates on his leased car, she was right.
To add insult to injury, if you decide you want to purchase a vehicle at the end of a lease, the state charges you sales tax again on the purchase price of the used vehicle. They get away with this using the following logic: The sales tax on the original lease was charged to the lessor, not the lessee. Therefore you aren’t being taxed twice for the same vehicle. Of course no leasing company is going to eat the cost of the sales tax so they pass it along to you in the lease payments. Result: you pay sales tax twice on the same vehicle, once when it was new, and again when it is sold as used.
A perfect example of sticking it to you at both ends…and why leasing is a lousy idea, especially in TX.