kadify

So I got a good price on an is350 from california but when I told them I would be leasing most likely they said, since I live in colorado, that they weren't sure how that would work. After talking for a bit they said they think I'd have to register the car in california when I pick it up and then again when I actually get back to colorado, after driving the car home, which just seems crazy to register the car twice in a matter of days...

Does that sound right?

The sales person I'm talking to also said they weren't sure how to calculate taxes because she said I needed a california address to get california taxes, which makes sense, but since I don't, she said it wasn't possible to sell a car with another state's taxes

gmanusmc

You probably need to research the DMV and sales tax regs of both states. Sales tax is normally based on where the car is registered. It's just a matter of whether the dealer you lease the car from can administratively do what needs to be done to make that happen. Also, maybe a call to Lexus Finance could clear things up. When my wife and I moved to CA, Honda just changed the tax info on our leased Acura from Virginia to Orange County automatically when we reported our change of address. I really think the dealer just needs to coordinate with Lexus Finance and they could sort this out.

roughyear

You'll need to pay sales tax in the State you register in (Colorado). California shouldn't be charging you sales tax if you're not staying there. They should give 15 or 30 day tags to take it home and when you register in your home state that's the tax you pay to get your tags. Unless California does not have temp tags, and force you to pay taxes, in that case, Colorado should give you a credit for taxes paid in another state... but you should check with your DMV first about the credit.

gmanusmc

CA only charges sales tax on the depreciation and interest portion of a lease payment - Colorado may or may not differ in this policy. Most likely the lease will be through Lexus Financial and they should be able to sort this out and easily resolve any issues. - it might be as easy as the leasing dealer's Finance Dept just inputting the appropriate tax rate in the system. Some states, however, charge sales tax on the entire sales price even for leases. I'm not sure what Colorado's requirements are. Therefore, my recommendation for coordination between leasing dealer and Lexus Financial. C'mon guys - this isn't that hard. Contact the folks who deal with this on a regular basis.

azmojo

I just went through this with an out of state purchase of a Lexus.

If you drive it off the lot in CA, you pay CA taxes.
If you ship it to your state, you will pay taxes in your own state in accordance with your own state's laws. In my case, they will collect the tax when I register the car based on where I live.

I don't know how that might change with a lease, but hopefully that will help.

kadify

Thanks for the help everyone. They figured it out that I would just pay taxes in california, as I'd pick the car up there, and then I'd just register it in colorado from what I understand. Still trying to sell my current car so haven't gotten the car yet unfortunately and who knows if the deal will change in a few days due to a new month and quarter starting.

gmanusmc

azmojo - not sure if you took delivery yet or not but could you post how the tax ramifications sort out for you - I have an idea it would be useful info for us. My understanding is most states have reciprocal agreements so that if you pay the sales tax in the state of purchase, you do not have to pay again where you register the vehicle in the other state. Of course, I think there are time constraints involved and the difference would be collected if the registering state's rate is higher.

Thanks

azmojo

I have purchased the car and discussed this with the dealer. If I drove it off the lot in CA, I had to pay CA tax (9%!). If I shipped it to AZ, I paid them zero tax. I have not registered it yet in AZ, but they (AZ DMV) will hit me up for sales tax when I get it here (based on where I live). Lucky for me, I live in a county island so I escape city taxes (I still pay county and state) which saves me a few percent.

I researched this topic online and it does vary from state to state but generally if you drive it off of the lot, you pay local sales tax and there may be adjustments or additional taxes due when you register it in your home location (particularly if your local tax is higher than what you paid).

There are states such as AK and MT that have no sales tax, but alas you cannot escape sales tax by buying and driving off of the lot there. You'd have to register it there (and be a resident for some period of time) before you registered it in a state that charges sales tax (they made sure to close that loophole!).

I purchased a new truck on eBay from TX in 2004 and it worked the same way. No sales tax to the dealer, and they hit me with the sales tax bill when I registered it in AZ.

Arizona has extensive guidelines for non-residents who buy cars in AZ and if they live on a state that "reciprocates." I assume most states operate this way or similar. These guidelines are here: http://www.azdor.gov/Business/Transa...icleSales.aspx

From what I gather, when a non-resident buys a car in AZ and drives it off of the lot, they pay 5.6%, and when they register it in their own state (that reciprocates), they have a credit for paying the 5.6% to AZ against what they would have paid in their own state. If their own state is lower than 5.6%, they will get charged the lower rate. If their own state is higher than 5.6%, they will pay additional taxes.

I will update if I learn anything else.

gmanusmc

@azmojo

Thanks - good information to have.

kadify

That is very helpful thank you! Taxes aren't a huge deal because with a lease in ca you only pay tax on the depreciation, which would work out to about maybe 1200 which over 36 months is only $30 but I appreciate that info. Wish I could get a refund from CO since our tax is only 6%

gmanusmc

So just to clarify, Lexus Finance is going to bill you the CA rate on your monthly statement even though the car will be registered and garaged in Colorado?

kadify

Well no i was very specific about it. What I was informed is since I'm picking up in California, when I finally get the car, I'll pay the first month's payment as if it is a California car but then I need to contact LFS and change my residence on file and then my payments should reflect colorado taxes, which hopefully will go down slightly. So really it will only be the first month that I pay california taxes.

gmanusmc

Ok - that sounds like the way it should be - sounds like everything is on track for you - can't wait to see how great your deal is gonna be!