[supafamous]

Originally Posted by Traum

Depending on what the interest rates are and how the federal luxury car tax gets applied, it might be viable to lease the car to start, and only buy it out once the residual value drops below the $100k or $125k mark. Bear in mind that the (dealership) PST rate on cars in the $57k - $125k range is 10%, while the PST rate jumps to 15% for cars in the $125k - $150k range, and 20% for cars in the $150k+ category.

Before the federal luxury car tax came into play, I did some hypothetical calculations on a $75k-ish lease. If you rig the numbers right, in theory at least, the tax savings from buying out the car with the lowered residual value can make it cheaper than the total amount of interest you pay on the lease. And then there is the extra benefit of you being able to defer the lump sum payment for however long you lease the car before buying it out.

Me explaining all of this to my wife:



The luxury tax sure hits hard above $125k - my generously equipped proposed build's MSRP came out to $130k and there was $40k in taxes on top of that. My real build will be a lot less - I think I'd land, in current dollars, around $118k or so which would knock the taxes down by about $15-18k I think but if I do go over leasing might be a nice way to get around the hit about $125k. Thanks for the tip!