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Do You Have to Pay Property Tax on a Leased Vehicle?

In Texas, all property is considered taxable, unless it is exempt by state or federal law.  Does that mean you have to pay property tax on a leased vehicle?

Leased Vehicles for Personal Use

Leased vehicles produce income for the leasing company and are in turn,  taxable to the leasing company.  In many leasing contracts, companies require their lessees to reimburse them for taxes assessed on the vehicles.

Are There Any Exemptions?

Texas does exempt leased vehicles that are not held for the primary purpose of income production by the lessee.

These vehicles include passenger cars or trucks with a shipping weight of not more than 9,000 pounds and leased for personal use. Personal use would mean using the vehicle more than 50 percent of its use (based on mileage) for activities that do not involve the production of income.

How Do I Qualify?

To qualify for the exemption, you must timely file an affidavit with the leasing company. You may print the Lessee’s Affidavit of Primarily Non-Income Producing Vehicle Use form or get it from your particular leasing company.

To receive the exemption, the leasing company must file a Lessor’s Application for Personal Use Lease Automobile Exemptions application with the county appraisal district where the property is located before April 30 of each year.

The exemption application should contain all vehicles that are used primarily for personal use. If the leasing company does not file the application timely, the vehicle is not exempt for that year.

Make sure to follow up with your leasing company to check if everything is proceeding for that year correctly!

 

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Blog Author

Patrick O’Connor, MAI, Owner and President
Patrick O’Connor has been active in reducing property taxes, providing expert witness testimony and appraising commercial real estate property since 1983. Pat is active in publishing analyses and data with respect to the real estate market, while being a highly regarded media spokesperson for the real estate community. He holds a MAI, the highest achievable designation from the Appraisal Institute, and is a licensed senior property tax consultant. Pat earned a Master of Business Administration from Harvard University. In 2001, he authored the first definitive consumer guide to Texas property taxes, Cut Your Texas Property Taxes.

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