... how is sales tax applied on end of lease buyouts?

Hi all,

Back in April, I was offered $7500 of an early lease buyout, but I didn't take the offer. At the time, the sales guy's manager told me that my final offer was too low and went on to explain that the sales tax was based off the full residual value and NOT the sales price after the $7500 credit.

As I will be returning my leaf soon, I wanted to be well informed in case of any last minute buyout offers. Is the sales tax (LA county in california is ~9.5%) really applied against the full residual value?! That's a $741 difference!

example:
residual value: $12,000
NMAC credit towards buyout: $7500
dealer processing fee: $300

sales tax on full amount + fee: $1,168.50
sales tax on discounted price + fee: $427.50


I get that the dealer will want their pound of flesh, but this seems more predatory. Am I mistaken?

I believe, from what I've read here, that the tax is on the non-discounted residual. Look in the 'End of Lease' topic for that.

I'm not sure how it works in California. When I bought my last 2 new cars here in Florida (2015 Leaf & 2016 Ford F-150) the value of the manufacture rebates and NMAC cash credit were taxable. Dealer discounts were not taxable.

To state it another way, sales tax was based on price after any dealer discounts but before any manufacture rebates.

When I bought my 2015 Leaf I got $11,000 in rebates/credits and dealer discounts. I paid sales tax on the $5,000 NMAC Cash and the $1,000 additional military cash but didn't pay sales tax on the $5,000 dealer discount.

Thanks everyone. I was afraid of this.