Georgia car rental versus lease sales tax

By January 11, 2019 Georgia Sales Tax

Georgia car rental versus lease sales tax

When it comes to car rentals and leases, the first thing that needs to be determined are the definitions of both “rental,” and “lease.” These two terms cannot be used interchangeably, because they constitute two entirely different transactions, with two entirely different tax implications.

For the purpose of TAVT, what is a “lease” and “rental”?

Under O.C.G.A. § 48-5C-1, a “lease” is any transfer of possession or control of a motor vehicle for a term lasting 31 of more consecutive days for consideration. A “rental” is any transfer of possession or control of a motor vehicle for a term lasting 31 consecutive days or fewer.

For of a vehicle that will be leased, the TAVT is due along with the application for certificate of title within thirty days of the date of purchase.

Is the lease or rental of an automobile subject to sales and use tax?

Rental charges are subject to sales and use tax based upon the county where the motor vehicle is to be registered; however, lease payments are exempt from sales and use tax. For rentals, the tax is computed on the gross rental charge.

When a car is rented to another entity, there is a rental agreement. The title is held in the owner’s name and sales tax is paid on the rental at the normal state plus county tax rates. When a car is leased, there is NO SALES TAX! Yes, there is no sales tax on a car rental because you ARE PAYING TAVT (Title Ad Valorem Tax).

The Georgia Department of revenue states that sales tax applies to car rentals and then creates some confusion about the law, when it explains that it applies to car rentals under 31 days. If you are renting a car and the rental agreement clearly states as such, you will be paying sales tax. If you rent the car for over 31 days, it does not become a lease where you simply do not pay any tax. If it was an “true lease, (requires a lease agreement, residual value, title transfer), then you would pay TAVT.

Georgia car rental versus lease sales tax

Ansari Law Firm

Author Ansari Law Firm

More posts by Ansari Law Firm

Leave a Reply