# Anyone familiar with Texas Sales Tax Credits through BMW Financial?



## Peregrinus (Sep 16, 2006)

Got an email saying there are end of month TX Motor Vehicle Tax Credits available against a lease. Anyone know the story on these? It's not a state program - must be an incentive through BMW financial. . .


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## lmcjcao (Sep 30, 2010)

*Was given $20,000 tax credit on a lease proposal yesterday*

but I was asked to sign everything today.


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## mtbscott (Jul 16, 2003)

Never heard of this before, but since in Texas you pay the entire sales tax on the CAP cost, maybe they're "paying for it" by basically discounting the total costs to you by that much. On the $20K amount mentioned above that would be a $1250 credit.


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## lmcjcao (Sep 30, 2010)

right, the paper I got showed the original cap tax was $3,297.35, new one showed tax of $1,974.06... difference of $1,323.29... was told that program is ending today.


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## Peregrinus (Sep 16, 2006)

OK - so here's the full story. I ordered my new car about 2 months ago - been waiting on it for delivery. On Tuesday, I get an email about this tax credit thing from a competing dealer. Hmmm. . .why didn't my dealer tell me about this - I wonder if it's available to me. I call the competing dealer to get the story and they say that BMW is giving out tax credits as an incentive to get people into leases end-of-month. . .well, would have been nice.

Next day, my dealer calls me and says, hey - car is here, can you pick it up tomorrow (last day of the month). Hmm. . .I wonder if these tax credits are available even though I already negotiated the deal. So I through it out - what about the tax credits? My dealer says he'll see what he can do, it would help him out if I picked it up before end of the month.

Long story short - dealer came through for me. Got me a nice little savings of about 15 bucks a payment - not a ton of money, over the course of three years, that adds up as a nice little savings. 

I've never seen these before, but be on the lookout or ask if you're getting into a lease and it's getting towards end-of-the month.


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## TXPearl (Apr 16, 2010)

I'm a repeat leaser through BMWFS, and I can tell you that (in theory at least) sales tax credits are always available. Keep in mind that in TX, sales tax is paid on the net purchase cost (after trade-in). BMWFS is the owner of the leased vehicles, and lease returns are effectively "trade-ins". How they allocate the trade credit (and therefore, the sales tax credit) is apparently up to them. 

To reduce the net cost of leasing, you should always try to work them into the deal.

As was the case in your situation, dealers and BMWFS will use these credits as a marketing tool (just like a rebate or any other manufacturer incentive). They won't tell you about them unless they have to or need to - why should they, if you're willing to do the deal without it, they'll save if for the next customer.


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## chrischeung (Sep 1, 2002)

Will the tax credits work with European Delivery? Technically it would seem so, right?


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## TXPearl (Apr 16, 2010)

chrischeung said:


> Will the tax credits work with European Delivery? Technically it would seem so, right?


They'll work if you have to pay Texas sales tax.


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## Peregrinus (Sep 16, 2006)

TXPearl said:


> I'm a repeat leaser through BMWFS, and I can tell you that (in theory at least) sales tax credits are always available. Keep in mind that in TX, sales tax is paid on the net purchase cost (after trade-in). BMWFS is the owner of the leased vehicles, and lease returns are effectively "trade-ins". How they allocate the trade credit (and therefore, the sales tax credit) is apparently up to them.
> 
> To reduce the net cost of leasing, you should always try to work them into the deal.
> 
> As was the case in your situation, dealers and BMWFS will use these credits as a marketing tool (just like a rebate or any other manufacturer incentive). They won't tell you about them unless they have to or need to - why should they, if you're willing to do the deal without it, they'll save if for the next customer.


This is good to know for the next time - I had no idea that there was such a program. I guess I don't blame them for not telling me if they don't need to but sheesh - people should at least know to ask for it.


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## pcbrew (Aug 31, 2009)

Is anyone in Texas familiar with the tax exemption for personal use leased vehicles?

I have never leased before but considering it now. However, being required to pay taxes on the full cap cost is a big hit considering a new lease every 3 years.

Here is the language of the bill (BTW, seems it was renewed in 2003 - section g)
http://www.window.state.tx.us/taxinfo/proptax/tc02/ch11b5.htm#11.252

Here is information on implementation, including link to lessee affidavit, which requires notarization:
http://www.window.state.tx.us/taxinfo/proptax/stmt/stmt0202/

Now the bad part... Under section (f) of the bill, cities can elect to continue taxing leased vehicles. 
This link list cities that have voted to continue taxing all leased vehicles.
http://www.window.state.tx.us/taxinfo/proptax/personalauto/index.html

Unfortunately, I live in a city that taxes. However, hoping this may help a lot of other people avoid the taxman since many other, including Dallas, Plano, Ft. Worth & Houston do not tax.


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## SARAFIL (Feb 19, 2003)

Peregrinus said:


> This is good to know for the next time - I had no idea that there was such a program. I guess I don't blame them for not telling me if they don't need to but sheesh - people should at least know to ask for it.


I'd love to hear more if you've actually seen this done before. While it technically sounds legit, I would wonder if it is legal. Yes, technically BMWFS is the owner of both cars so they should get a credit, but since the "trade in" car was leased to someone other than the person leasing the new car which is getting the credit, it is probably not legal. The only way I could see it being 100% legal if you turn in your old BMWFS leased car and they apply the credit towards the lease of your new car through BMWFS.

I know of dealers that used to do this in another state that required full sales tax based on purchase price for leases, but I'm pretty sure they had to stop doing it after the legality was questioned. I don't know if it was a result of the state or if BMWFS asked them to stop doing it though.


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## Peregrinus (Sep 16, 2006)

SARAFIL said:


> I'd love to hear more if you've actually seen this done before. While it technically sounds legit, I would wonder if it is legal. Yes, technically BMWFS is the owner of both cars so they should get a credit, but since the "trade in" car was leased to someone other than the person leasing the new car which is getting the credit, it is probably not legal. The only way I could see it being 100% legal if you turn in your old BMWFS leased car and they apply the credit towards the lease of your new car through BMWFS.
> 
> I know of dealers that used to do this in another state that required full sales tax based on purchase price for leases, but I'm pretty sure they had to stop doing it after the legality was questioned. I don't know if it was a result of the state or if BMWFS asked them to stop doing it though.


They did it for me on this lease - saved me a bit on my monthly payment. I can't speak to the legality of it, as far as I know, BMW has a pile of money that they get back from the state and are willing to give it out as an incentive. Anyway, I was able to take advantage of this even AFTER I signed all the paperwork and negotiated the deal. They could have simply said "no" as far as I know.


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## Peregrinus (Sep 16, 2006)

pcbrew said:


> Is anyone in Texas familiar with the tax exemption for personal use leased vehicles?
> 
> I have never leased before but considering it now. However, being required to pay taxes on the full cap cost is a big hit considering a new lease every 3 years.
> 
> ...


I'm not a tax attorney but I am an attorney. I just glanced at the statute and the adopted rule from the comptroller. . .so this isn't based on any knowledge or in-debth research, however.

I believe the rule exempts leased vehicles from property taxes, not sales taxes which is where the big hit comes in in the cap costs.

The surprise to me was that although Texas does not impose a property tax on personal property such as automobiles, certain municipalities do! It looks like this is a growing trend and although Dallas and Houston don't currently impose a property tax on automobiles, there is nothing that prevents the city counsels from adopting such a tax and imposing it at any time.

Municipalities are suffering right now even in Texas from budgetary strain due to decreased revenues coming in. Rather than do the right thing, and cut budgets, many of these municipalities are simply upping the ante with higher property taxes. Dallas just passed a big increase and others are doing likewise. It would not surprise me at all to see bigger cities impose property taxes on vehicles in the future.


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## TXPearl (Apr 16, 2010)

Correct, the TX tax exemption referred to by pcbrew is for property tax, not sales tax.

Sarafil, can't verify the legality of the trade credit/sales tax scheme used here, but BMWFS has been doing it for many years. So has Honda Financial, so it's not just BMWFS. I doubt they'd be so brazen as to take this approach without knowing it's legal.

For each lease transaction, I receive a copy of the vehicle sales tax receipt and it shows the exact gross taxable amount for the leased vehicle, the trade credit amount (even though I'm not trading in a vehicle) and the net taxable value (usually zero, but it could still be positive if they're only giving partial credit).


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## pcbrew (Aug 31, 2009)

Thanks for the clarifications *Peregrinus* and *TXPearl*.


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## pylt (Jun 10, 2003)

*BMW FS pays TX lease taxes for October 2010!*

Just heard from my "a source in a position to know" that BMW FS IS covering the full taxes on all October leases, from 15 October on.

Just FYI. Note that the dealer may forget to tell you and pocket the difference . . . .

Supposedly, this will end at the EOM in October, but may occur again and again.


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## Bruin72 (Feb 3, 2005)

pylt said:


> Just heard from my "a source in a position to know" that BMW FS IS covering the full taxes on all October leases, from 15 October on.
> 
> Just FYI. Note that the dealer may forget to tell you and pocket the difference . . . .
> 
> Supposedly, this will end at the EOM in October, but may occur again and again.


Is that for Texas only?


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## pylt (Jun 10, 2003)

Bruin72 said:


> Is that for Texas only?


As far as I know, but I only know about Texas, this is a Texas only deal.

Just so you know, Texas is VERY lease unkind. While not an expert, it appears they charge you for the full price of the car--the whole deal, not just the small part of the car that you'll be using--for taxing purposes. Then if you buy it, they supposedly tax you again, but I'm not sure about that part as I've never personally leased a car in Texas.

I've just heard that it really cleans out your wallet as the state has better uses for your money . . .

Any Texas CA's, do please chime in!

Thx.


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## nsoltz (Nov 30, 2007)

During the years we lived in TX, we leased through Navy Federal Credit Union. Since NFCU is a non-profit, there was NO sales tax. Moritz in Arlington offered us a lease through BMWFS with sales tax credits, but NFCU actually had a lower rate. Parenthetically, we ended up leasing a Lexus because we found the BMW dealers in DFW so insufferable that we just would not do business with them.


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## DaleJ (Oct 25, 2010)

nsoltz said:


> During the years we lived in TX, we leased through Navy Federal Credit Union. Since NFCU is a non-profit, there was NO sales tax. Moritz in Arlington offered us a lease through BMWFS with sales tax credits, but NFCU actually had a lower rate. Parenthetically, we ended up leasing a Lexus because we found the BMW dealers in DFW so insufferable that we just would not do business with them.


You must have been to the BMW dealer that moved from near 635/35 down to lemmon ave.
I just got the brush off from them last weekend.
BMWs aren't cheap, (well, at least for me) you'd think they would be interested in moving one.


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