Lease question for Chicago
01-18-2006, 02:08 PM
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My Ride: 2006 BMW 550i "Ben Hogan's 5 Iron"
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2003 Audi A4 3.0 CVT "Part of the Moniker"
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Is it true that us Chicagoans must pay the entire amount of sales tax during our lease period? Said another way, its more expensive to lease in the Land of Lincoln because we pay all of the sales tax. Just curious. 
And to add insult to injury, someone else buying the returned car, say 36 months later, will pay sales tax a second time.
CVT Benhogan
And to add insult to injury, someone else buying the returned car, say 36 months later, will pay sales tax a second time. CVT Benhogan
01-18-2006, 03:18 PM
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My Ride: 2008 Porsche 911 Carrera S Convertible. Midnight Blue, 6 Speed.Retired - 2007 997 Carrera S, Midnight Blue, Grey leather, premium audioRetired - 2007 550i, Monaco Blue over Beige, Navigation, Logic 7, Cold Weather Pack, Comfort Access, Sport Package
Model Year: 2008
Yes, in Illinois the sales tax is calculated on the vehicles original purchase price then the tax amount is allocated over the life of the lease (i.e. each payment is increased by the tax amount / 36 for a 3 year lease). In CA, the sales tax is calculated on the lease payment. I made the mistake of moving a "tax paid" Illinois vehicle to CA in 2001 and ended up having CA sales tax added to my base lease payments - which of course already contained 1/36 of the original IL sales tax, so I got hit twice... There are some action steps that can be taken by either the leasing co or the lessee that might help in cases like this but they are time limited and in my case weren't applicable. Pretty sure IL is one of only a handful of states that operate the "amortized" sales tax policies, generally it's just an addition to the base lease payment.
01-18-2006, 05:30 PM
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My Ride: 2008 Sapphire Black on Black M5 - loaded sans soft close doors
Right. The IL Dept of Revenue looks at it as TWO purchases.
1. Car is purchased by the leasing company, so of course sales tax must be paid. Leasing co is not going to handle it so they charge you for it. Worse, you get to pay interest on it if you roll it into your lease payment!
2. At end of lease if you purchase the car, YOU are now purchasing the car - they look at it as a second transaction! So now you pay sales tax again on the purchase price.
On a 3 year lease on a $65K car you are looking at approx $140 extra added to your monthly car payment.
While I don't find it fair, at least I understand their (IL dept of rev) thinking. I doubt with the states current financial situation, it will change.
edit: - There is one loophole! If you re-lease through the SAME leasing company, your car's buy out counts as a trade in terms of sales tax! So if your buy out is $30K and you re-lease a $65K car through the SAME leasing company, you only pay sales tax on the $35K dif.
1. Car is purchased by the leasing company, so of course sales tax must be paid. Leasing co is not going to handle it so they charge you for it. Worse, you get to pay interest on it if you roll it into your lease payment!
2. At end of lease if you purchase the car, YOU are now purchasing the car - they look at it as a second transaction! So now you pay sales tax again on the purchase price.
On a 3 year lease on a $65K car you are looking at approx $140 extra added to your monthly car payment.
While I don't find it fair, at least I understand their (IL dept of rev) thinking. I doubt with the states current financial situation, it will change.
edit: - There is one loophole! If you re-lease through the SAME leasing company, your car's buy out counts as a trade in terms of sales tax! So if your buy out is $30K and you re-lease a $65K car through the SAME leasing company, you only pay sales tax on the $35K dif.
01-18-2006, 05:45 PM
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My Ride: 2006 BMW 550i "Ben Hogan's 5 Iron"
SilverGrey/Black Sport, L7, NAV, CW, AS, Split FR
2003 Audi A4 3.0 CVT "Part of the Moniker"
Silver/Ebony, Prem, CW, Star 17s
Originally Posted by doug_999' post='226205' date='Jan 18 2006, 10:30 PM
Right. The IL Dept of Revenue looks at it as TWO purchases.
1. Car is purchased by the leasing company, so of course sales tax must be paid. Leasing co is not going to handle it so they charge you for it. Worse, you get to pay interest on it if you roll it into your lease payment!
2. At end of lease if you purchase the car, YOU are now purchasing the car - they look at it as a second transaction! So now you pay sales tax again on the purchase price.
On a 3 year lease on a $65K car you are looking at approx $140 extra added to your monthly car payment.
While I don't find it fair, at least I understand their (IL dept of rev) thinking. I doubt with the states current financial situation, it will change.
edit: - There is one loophole! If you re-lease through the SAME leasing company, your car's buy out counts as a trade in terms of sales tax! So if your buy out is $30K and you re-lease a $65K car through the SAME leasing company, you only pay sales tax on the $35K dif.
1. Car is purchased by the leasing company, so of course sales tax must be paid. Leasing co is not going to handle it so they charge you for it. Worse, you get to pay interest on it if you roll it into your lease payment!
2. At end of lease if you purchase the car, YOU are now purchasing the car - they look at it as a second transaction! So now you pay sales tax again on the purchase price.
On a 3 year lease on a $65K car you are looking at approx $140 extra added to your monthly car payment.
While I don't find it fair, at least I understand their (IL dept of rev) thinking. I doubt with the states current financial situation, it will change.
edit: - There is one loophole! If you re-lease through the SAME leasing company, your car's buy out counts as a trade in terms of sales tax! So if your buy out is $30K and you re-lease a $65K car through the SAME leasing company, you only pay sales tax on the $35K dif.
Thanks Doug...
I might re-lease down the road or buyout depending on the market price. Nothing wrong with being an E60er for a long time. Its a killer ride.
CVT Benhogan
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