[Traveler]

First let me say that I have always purchased cars so leasing is totally new to me. From what little research that I've done it seems like leases in Texas are particularly unattractive since you have to pay taxes on the full price of the car. One site came right out and said don't lease in Texas. It's a bad deal. Any comments?

[Hankdoll]

I imagine that paying the full amount would just negate one of the advantages of leasing. That's too bad. However, you have to pay the full tax if you buy it. Does Texas give a tax rebate when you eventually trade the car in? California doesn't. If you buy a car and sell it 3 months later, oh well...you're out the full tax amount.

[itzazkrit]

Yeah I was wondering..since you do originally pay tax on the full car at the beginning of the lease....do you have to pay tax again if you end up buying it out at the end? If so that would seem like you would get taxed twice.

[marketman]

you are only taxed on the residual.......or.... the selling price of the car

[itzazkrit]

But you originally pay tax on the entire car. It would only make sense if you pay tax initially on the depreciation, and then tax on the residual or buyout when you buy it at lease end.

[NaTuReB0Y]

Why is it "nuts to leave Texas?"

[ricky88]

yes, you have to pay tax again at the end if you want to buy out...
if u live in TX.

[SteveMD]

Same in MD. Full tax on buy price at lease inception.

[itzazkrit]

It was explained to me that since, originally the title is in BMW's name, if you buy it our the title has to transfer, and thus pay sales tax again.

What I don't understand fully...is how they can charge you sales tax on capitalized cost reduction (ie cash down) if they already charge you sales tax on the sales price before applying the cash down.

I was looking at a worksheet prepared by me BMW dealer and there is a "phantom" charge of $93.93 (equal to 6.25% of my $1500 cash down payment).