Vehicle Taxability - Leasing & Dealers

Leasing and Auto Dealer Transactions

When buying a vehicle from an auto dealer, there are many options available to the consumer.  Here we will provide information on how the sales tax applies to the different transactions that may occur.

 

Leases

A lease is any transfer of the possession or control of tangible personal property for a fixed or indefinite term, for consideration. Leases include future options to purchase or extend, and agreements where the amount of consideration may be increased or decreased by reference to the amount realized upon the sale or disposition of the property.

The link below will take you to a memo drafted by the Ohio Department of Taxation explaining how leases of motor vehicles are taxed.

Leasing Memo

 

Sales to Non-Residents of Ohio

Sales made in Ohio to a non-resident of Ohio that will be immediately removed from this state are generally exempt from Ohio sales tax.  Sales of motor vehicles that will be immediately removed to Arizona, California, Florida, Indiana, Massachusetts, Michigan, and South Carolina are the only sales that are the exception to this rule.  Please see the Information Release for details.

 

The below chart can be used for a quick guide on how to calculate sales tax for these states:

 

 

State

Sales Tax Rate

Trade-In Allowance

Special Provisions

Arizona

6.60%

Yes –New and Used

 

California

7.25%

No

 

Florida

6.00%

Yes- New and Used

 

Indiana

7.00%

Yes-New and Used

Nonresident exemption for RVs and trailers with a load capacity of at least 2200 pounds

Massachusetts

6.25%

Yes-New and Used

 

Michigan

6.00%

No

 

South Carolina

5.00%

Yes-New and Used

Tax cap of $300.00

 

Frequently Asked Questions Tool

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on  the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

When must the clerks of courts obtain an exemption certificate or completed forms T-610 or T-615?

The clerk must obtain exemption certificates on all dealer title transfers of retail sales and forms T-610/T-615 on casual (non-dealer) title transfers if the purchaser claims one of the below exceptions/exemptions supported by an ATPS exemption code. Note: If taxes are paid on a title transfer, no exemption certificate or form T-610/T-615 is needed.

CF Commercial fishing – watercraft – commercial fishing license required
CH Church
CM Conversion – military (purchased out-of-state for use out-of-state)
CS Consolidation
DF Direct use – farming
DM Direct use – mining
DO Direct use – oil and gas
DR Research and development
DS Dissolution to stockholder with no consideration
FD Foreign diplomat – exemption card required
IS Sale of a motor vehicle as interstate commerce
IP Individual to partnership with no consideration
MO Manufacturing operation – i.e., cement mixer
MR Corporate merger with no consideration
NP Nonprofit, charitable
NR Nonresident affidavit
OD Sale of a motor vehicle/watercraft to an out-of-state dealer
PD Partnership, dissolution with no consideration
PT Nonlicensed production transportation
PU Direct use in a public utility service
RD Resale – demonstrator (dealer permit and VL required)
RI Resale – implement/equipment dealer
RM Remanufacturing – chassis or part
RS Redeemed – return sale
RV Resale – watercraft (VL required)
RW Resale – wholesale only
TH Highway transportation for hire (PUCO or ICC permit number required)
TS Transportation services (VL required)
UM Undisturbed mortgage
VF Volunteer fire department – contract basis
WH Warehousing – not licensed for highway use

When must the clerks of courts obtain an exemption certificate or completed forms T-610 or T-615?

The clerk must obtain exemption certificates on all dealer title transfers of retail sales and forms T-610/T-615 on casual (non-dealer) title transfers if the purchaser claims one of the below exceptions/exemptions supported by an ATPS exemption code. Note: If taxes are paid on a title transfer, no exemption certificate or form T-610/T-615 is needed.

CF Commercial fishing – watercraft – commercial fishing license required
CH Church
CM Conversion – military (purchased out-of-state for use out-of-state)
CS Consolidation
DF Direct use – farming
DM Direct use – mining
DO Direct use – oil and gas
DR Research and development
DS Dissolution to stockholder with no consideration
FD Foreign diplomat – exemption card required
IS Sale of a motor vehicle as interstate commerce
IP Individual to partnership with no consideration
MO Manufacturing operation – i.e., cement mixer
MR Corporate merger with no consideration
NP Nonprofit, charitable
NR Nonresident affidavit
OD Sale of a motor vehicle/watercraft to an out-of-state dealer
PD Partnership, dissolution with no consideration
PT Nonlicensed production transportation
PU Direct use in a public utility service
RD Resale – demonstrator (dealer permit and VL required)
RI Resale – implement/equipment dealer
RM Remanufacturing – chassis or part
RS Redeemed – return sale
RV Resale – watercraft (VL required)
RW Resale – wholesale only
TH Highway transportation for hire (PUCO or ICC permit number required)
TS Transportation services (VL required)
UM Undisturbed mortgage
VF Volunteer fire department – contract basis
WH Warehousing – not licensed for highway use