How much sales tax can I deduct for a new car lease?

[dboom]

I itemize my deductions. 

I leased a new vehicle in July 2017. My monthly payment includes sales tax of $24.53 (total of $149.58 for July - Dec). Is this all I can deduct, or can I deduct the sales tax for the entire 36 month term of the lease?

Also, there was a sales tax charged on the capitalized cost reduction (two separate sales tax charges of $182.24 and $30.37). Are these deductible too?

I have attached a picture of the lease charges if someone can make sense of them for this issue. Thank you.

[ledbett49]

ever get an answer? I'm in the same boat - sales tax is paid each month as part of my payment

[lynleyy]

I am trying to find this answer also!

[CherylW]

You cannot deduct any of it.

This, from IRS guidance for Car Sales and Excise Tax Questions: Questions and Answers:

Q:  Does leasing a car or other vehicle qualify for this deduction?

A. No, leases and rentals do not qualify for this tax deduction. The law specifies that the deduction applies to the purchase of qualified new vehicles. A lease is not a purchase for the purpose of this deduction.

Find the full text by following this link:

Car Sales Tax

[dboom]

Maybe my question wasn't as clear as it could have been. This is for the State and Local General Sales Tax deduction for large purchases. In the instructions for 1040 Schedule A, the IRS says explicitly:  Sales taxes on motor vehicles are deductible as a general sales tax even if the tax rate was different than the general sales tax rate. . . . Include any state and local general sales taxes paid for a leased motor vehicle."

Thus, sales tax paid for a leased motor vehicle is expressly allowed for deduction.

[dboom]

I live in Florida, so I am choosing to itemize sales tax instead of state income tax.

[CherylW]

My apologies.  Let me try this again.

From IRS; Sales Tax Deduction Calculator:

Also include any state and local general sales taxes paid for a leased motor vehicle.

If you are a cash basis taxpayer (as most of us are), you can only take the amount of tax paid in 2017 on your 2017 return.  So you could take off only the July - Dec payment that you made in 2017.

Thanks for the clarification.

[Maggie35]

I paid 159.59 for tax on capitalized cost reduction.  Can this be included in sales tax area?  If not, can I use this credit.  Also the monthly tax fee on payments is 17.05 is this what I list as sales tax.  there is a rent charge in addition to the depreciation and any amortized amounts can this  be deducted?

[Cynthiad66]

Yes.   If you pay sales tax on your car lease, you may be able to take a deduction for it on your federal income taxes. You must choose either sales tax or income taxes to deduct. And you must itemize in order to take the deduction.  Either or but not both.  Yes you can deduct the capitalized cost reduction tax too.

If your vehicle lease is subject to state sales tax, how much you have to pay and when you must pay it will vary by state.

Some states may charge sales tax on any down payment you make for your car lease. Some might tax the full amount of the vehicle while others may only levy a sales tax on the depreciation you’re paying during the lease term.

[RedhairMac]

How do I get state-specific info?

[Mike9241]

if there is a state sales tax as well as any local, county, or other sales tax it should have been in the lease documents you signed.   then the question becomes did you pay 100% of those taxes up from or a they prorated and included in each lease payment.

the best source would be the leasing company