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2Addicts | BMW 2-Series forum BMW 2 Series (F22) Forum 2 Series Pricing, Ordering, European Delivery Pros/Cons of Leasing in DC vs. VA?

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      05-08-2014, 04:19 PM   #1
bubsterino
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Pros/Cons of Leasing in DC vs. VA?

This question is to everyone living in the DC / Virginia area. I have initially made my deal to be titled in Virginia where I'm currently living, but I will be moving to DC in a few weeks. Because my car has not been delivered yet, and I have nothing but time on my hands, I'm thinking about the pros and cons of titling the car in DC versus Virginia, and related taxes and ultimate monthly lease payments.

I understand that in Virginia, you get taxed on the total sales amount of the car for the lease (at 4%) upon delivery, but you do not pay taxes on the monthly payments. You also have personal property taxes in VA. In DC, though the DMV website makes no mention of this (shocker), you pay taxes on the total cost of ownership for the lease (sales price - residual) at 10% per month (I believe no taxes on the delivery date?).

Can anyone speak to the pros and cons of DC vs. VA? I'm going to run the numbers this evening and see where I'd be better off, but would appreciate any pointers from you guys. I believe I can also have my CA in VA run the numbers both ways.

Thanks!

Last edited by bubsterino; 05-09-2014 at 10:01 PM..
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      05-09-2014, 10:01 PM   #2
bubsterino
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Quote:
Originally Posted by bubsterino View Post
This question is to everyone living in the DC / Virginia area. I have initially made my deal to be titled in Virginia where I'm currently living, but I will be moving to DC in a few weeks. Because my car has not been delivered yet, and I have nothing but time on my hands, I'm thinking about the pros and cons of titling the car in DC versus Virginia, and related taxes and ultimate monthly lease payments.

I understand that in Virginia, you get taxed on the total sales amount of the car for the lease (at 4%) upon delivery, but you do not pay taxes on the monthly payments. You also have personal property taxes in VA. In DC, though the DMV website makes no mention of this (shocker), you pay taxes on the total cost of ownership for the lease (sales price - residual) at 10% per month (I believe no taxes on the delivery date?).

Can anyone speak to the pros and cons of DC vs. VA? I'm going to run the numbers this evening and see where I'd be better off, but would appreciate any pointers from you guys. I believe I can also have my CA in VA run the numbers both ways.

Thanks!
anyone in NOVA/DC I can speak with? Thanks in advance for your time.
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      05-09-2014, 11:45 PM   #3
adrianv
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Assuming a MSRP and net cap cost of 50k at base lease rates with no MSDs:

Depreciation: 50000*.4/36 = 555
Interest: 50000+30000*.00130 = 104
Total: 660

4% tax = $2000
10% of payment tax = 66*36 = 2376

Assuming you are a pay it all up front kind of guy with your fees, you are better off paying the 4% now. However, if you end up rolling in the tax to your payment, you are now paying extra interest (to keep it apples to apples):
2000*.00130 * 36 = $93

You never said what your extra VA property taxes are, but paying up front or rolling it in to the lease is preferable unless your property taxes for the vehicle are more than $300 over three years, in which case your DC option is better.

$2000 earning 5% will become 2315 in three years.

I would probably choose DC to avoid the mysterious VA property tax, although the idea of paying property tax for property you do not own (a lease) is bizarre.
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      05-10-2014, 06:10 AM   #4
bubsterino
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Quote:
Originally Posted by adrianv
Assuming a MSRP and net cap cost of 50k at base lease rates with no MSDs:

Depreciation: 50000*.4/36 = 555
Interest: 50000+30000*.00130 = 104
Total: 660

4% tax = $2000
10% of payment tax = 66*36 = 2376

Assuming you are a pay it all up front kind of guy with your fees, you are better off paying the 4% now. However, if you end up rolling in the tax to your payment, you are now paying extra interest (to keep it apples to apples):
2000*.00130 * 36 = $93

You never said what your extra VA property taxes are, but paying up front or rolling it in to the lease is preferable unless your property taxes for the vehicle are more than $300 over three years, in which case your DC option is better.

$2000 earning 5% will become 2315 in three years.

I would probably choose DC to avoid the mysterious VA property tax, although the idea of paying property tax for property you do not own (a lease) is bizarre.
thanks for the note. VA is one of those states where we pay personal property taxes for our cars, and yes, that even includes leases. AND, we pay tax on the full value of the car, not just the leased amount. bummer.

I do think this becomes a math exercise - I'm rolling any/all fees/taxes into my lease payments. so the decision becomes whether the monthly ends up being lower with 4% tax based on the sales price rolled into the cap cost with no tax on monthly payments, or no tax up front and 10% tax on the monthly lease payments (in essence, only paying tax on the leased value, not total sales price which is how VA taxes).
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      05-17-2014, 03:25 AM   #5
yep
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VA car tax on a 50K car is probably 1K a year or more.
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      05-21-2014, 05:29 PM   #6
five3three
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DC all day any day. There is no comparison. Virginia will tear you apart with those property taxes at over 1k a year.

My VA propriety tax is going to be 1500 for year one, 1300 for year two and about 1100 for year three.

DC makes their money back with a much higher state (city) income tax than Virginia so it would not make sense to move to DC but keep paying property tax in VA.

In an ideal world I would pay state income tax to Virginia and register my car in DC, not the other way around.

Last edited by five3three; 05-21-2014 at 05:58 PM..
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      05-21-2014, 10:31 PM   #7
bubsterino
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Quote:
Originally Posted by five3three
DC all day any day. There is no comparison. Virginia will tear you apart with those property taxes at over 1k a year.

My VA propriety tax is going to be 1500 for year one, 1300 for year two and about 1100 for year three.

DC makes their money back with a much higher state (city) income tax than Virginia so it would not make sense to move to DC but keep paying property tax in VA.

In an ideal world I would pay state income tax to Virginia and register my car in DC, not the other way around.
thanks so much. after I ran the numbers, my monthly payment is the same, but all upside with no taxes in DC. just gotta deal with the DC DMV now :
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