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

Please see the Information Release for details.

 

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 in which you are interested.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

A lease is consummated after January 31, 2002, between a lessor and lessee, both initially located outside Ohio in a state that taxes leases upfront. Thereafter the lessee brings the leased equipment into Ohio. How is the lease taxed in Ohio?

The balance of the lease charges due after the leased equipment is brought into Ohio is subject to Ohio’s upfront sales tax. Credit to Ohio’s tax is given for sales or use tax paid to the other state. If the other state’s tax equals or exceeds the Ohio tax, no additional tax is due.