How to Calculate the Tax Paid on a Lease Buyout
Original post by Ash Miller of Demand Media
When purchasing your lease from a bank, expect to pay the car's buyout amount, motor vehicle fees and a tax rate specific to your area. To calculate your tax charges, you'll have to know your lease purchase price and if any additional fees or charges are taxable. If you complete the lease purchase with a dealership, for example, expect to pay a taxable document fee. Other purchases, such as an aftermarket warranty or gap insurance, are also added to your taxable purchase price.
Review your contract or call your leasing bank to determine your lease buyout price. Obtain your area's tax rate by contacting your state's department of motor vehicles or by visiting its website. Many states issue a statewide rate, which is increased by individual towns or counties.
Ask your lender if it charges additional taxable fees. If you're purchasing from a dealer, ask the finance manager which fees it charges, and which are taxable. If you plan to purchase aftermarket items, add the cost of each item to your car's purchase price.
Multiply your taxable purchase price by your tax rate. Round the result up to the nearest cent to determine your tax cost.
About the Author
Ash Miller writes automotive and insurance content for various websites, blogs and dealerships. She has extensive automotive experience, including in auction, insurance, finance, service, Internet and management positions. Miller independently contracts for dealer sales events around the country and owns an automotive price negotiation service.