Ad Valorem Tax on Lease (especially Georgia)

I just leased a Leaf for 2 years in Georgia. Georgia now has a "Title Ad Valorem" tax, paid once at the time of purchase. In the case of a lease, that tax is apparently rolled in as a non-trivial portion of the monthly lease payment. The sales rep told me that it can be used as a property tax deduction on income tax.

Does anyone know if this is true, and how to find out the details?

Most research I have done indicated it is not deductible because it is a one time tax:

https://ttlc.intuit.com/questions/2284830-can-i-deduct-the-georgia-tavt-new-title-advalorem-tax-that-i-pard-on-a-vehicle-i-purchased-in-may-of-2013" onclick="window.open(this.href);return false;

http://www.irs.gov/publications/p17/ch22.html#en_US_2014_publink1000173204" onclick="window.open(this.href);return false;

Personal property tax is deductible if it is a state or local tax that is:

Charged on personal property,

Based only on the value of the personal property, and

Charged on a yearly basis, even if it is collected more or less than once a year.

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Since it's a single occurrence tax, that is paid at the time the vehicle is registered, based on the value of the vehicle, just call it sales tax and be done with it.

Geeze make it ridiculously complicated why not?

In PA you pay 6% sales tax when you title it.

In Delaware, where there is NO sales tax, they get around that with a 3.75% "Documentation fee"

Georgia's STATE sales tax rate is 4.0% I believe, and this latin based tax lets them get more revenue from car sales than they do from "regular" sales I guess.

The State of Delaware mandates a 3.75% Documentation fee on all vehicles? Wow.

First, I'm glad I saw this post before doing my taxes this weekend (I want to get those refunds). I had no idea it wasn't deductible. Thanks for posting!

Second, I'm confused as to why the state made the change to TAVT. It used to be that you paid sales tax when you bought a car (4% to state, plus more to city and county--usually 7% or 8% total), and an annual tax based on the value of your vehicle (which I think went to the county). Now you don't pay a sales tax or an annual tax on the car, but you do pay this up front 6.75% value-based tax (TAVT) which I think goes to the state. If you bring in a car from another state you also have to pay the tax. If you lease you pay the tax, and then if you buy at the end of the lease you have to pay the tax again. And you can get a credit for the value of a car you trade-in, but only in the same transaction where you purchase a vehicle from a dealer. It just makes things confusing. Maybe it was a way to shift revenues from the counties to the state, since counties don't seem to get anything out of the vehicle taxes now. And to subsidize GA dealers (since buying out of state and bringing it into the state costs more, and the dealers can low-ball you even further on the trade-in because of the difference in taxes).

Per Wikipedia: "Virtually all state and local sales taxes in the United States are ad valorem."

Nubo said:

Per Wikipedia: "Virtually all state and local sales taxes in the United States are ad valorem."

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There are basically 2 types of taxes, regardless of how they try to disguise them with mumbo-jumbo

Flat fee - flat rate . You know, it's $50 for a permit, $25 "registration fee" or something.

Then there are taxes and fees based on the value of an item (according to value = ad valorum)

Sales tax, property tax, the evil insidious "use tax" or anything that takes into account what an item is worth.

(you probably didn't care about that ) :roll:

KillaWhat said:

(you probably didn't care about that ) :roll:

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Not sure what you mean by that. I did take the time to read on what "ad valorem" was about, and our posts seem to be consistent with each other.

Nubo said:

KillaWhat said:

(you probably didn't care about that ) :roll:

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Not sure what you mean by that. I did take the time to read on what "ad valorem" was about, and our posts seem to be consistent with each other.

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Just thought I might be prattling on.
Reflection on me not you

KillaWhat said:

Since it's a single occurrence tax, that is paid at the time the vehicle is registered, based on the value of the vehicle, just call it sales tax and be done with it.

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Here in IL, they finally made a change on leasing cars so wanted to ask if GA 'taxes' the ENTIRE value/cost of the car or just the lease payments (which in most cases would simply be a 'partial' value tax).

This was a big deal here and more than likely depressed leasing as who wants to pay the full sales tax even though perhaps you only have a 2-year lease (with say a 50% residual) -- as of January 1st it dropped to just the lease payments.

http://www.bmwblog.com/2015/01/02/illinois-residents-will-now-pay-taxes-lease-payments/

redLEAF said:

KillaWhat said:

Since it's a single occurrence tax, that is paid at the time the vehicle is registered, based on the value of the vehicle, just call it sales tax and be done with it.

Click to expand...

Here in IL, they finally made a change on leasing cars so wanted to ask if GA 'taxes' the ENTIRE value/cost of the car or just the lease payments (which in most cases would simply be a 'partial' value tax).

This was a big deal here and more than likely depressed leasing as who wants to pay the full sales tax even though perhaps you only have a 2-year lease (with say a 50% residual) -- as of January 1st it dropped to just the lease payments.

http://www.bmwblog.com/2015/01/02/illinois-residents-will-now-pay-taxes-lease-payments/

Click to expand...

It's the ENTIRE value/cost of the car. And then if you buy at the end of the lease, you pay the tax AGAIN on the ENTIRE value/cost of the car. Another reason I chose to buy instead of lease ($3500 rebate, 0% for 6 years also helped).

In Texas anyway, you can request an exemption if the vehicle is not used for "business purposes." You have to sign an affidavit and have it notarized.