Capitalized Cost Reduction Tax?

beez97ls

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hello, I've been looking at the GT Special Editions (Chroma Blue) and have gotten to the point of almost pulling the trigger on a lease/buyout deal, and then when the dealer gets my zip code, all of a sudden there's a new line item on their lease calculation worksheet (see attached screenshot). It's a $692 Cap Cost Reduction tax, that's based on the current lease incentive of $7100 plus $4393 dealer discount. Basically the cap cost reduction tax is being added to the cap cost is the lease calc- like a dog chasing it's tail. Never hear of this tax before, but even if they're going to charge it, why should I be taxed on what Kia is willing to give me as an incentive and also what the dealer discounts the car for?! To me, a cap cost reduction should be based on what I myself decide to put down to reduce the cap cost. I hadn't seen any threads speaking to this, so wondered if anyone might know. I'm in TN and our state tax rate is 6%. Thanks for any help!STINGER FINAL.webp
 
Looks like Tennessee taxes on the amount before application of rebates. Check the bottom of page 5/top of page 6 on this article.


So what they've done in the CapRed/SalesTax section is added back the tax that would otherwise not be included in the total after incentives.

Nothing you can do about it as every state has different tax situations.

At least your tax rate is pretty low - here the total tax was higher plus registration fees were over $800.

The deal is decent at about $100 over invoice. Holdback is $1,278 on that model of Stinger though I believe, so the dealer still has ~$1400 to work with. I would try to get at least another $500 off (this would be seen through a dealer adjustment of $4900).
 
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thanks so much for your explanation, that makes sense!!! And for the negotiation advice :)
 
Can you share some final numbers on your deal? Thanks!
 
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