Automotive

Lease buyout w/ security deposit question

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  • Jul 17th, 2015 8:10 pm
[OP]
Member
Aug 5, 2010
368 posts
117 upvotes

Lease buyout w/ security deposit question

Simple question, but i can't find a straight answer in the lease paperwork!

Wife's honda lease is coming to an end - going to buy out the vehicle. Lease buy out is approx $12,500. Had put a $3,500 security deposit down at the start of lease (which reduced interest costs).

Question on the buy out calculation and taxes: Does applying the security deposit to the buyout reduce the taxes paid? Can it even be done, or would it be separate transactions (i give them a cheque for buyout and they give me a cheque for security deposit)?

Example:

Would the total buyout be $12,500 X HST = $14,125 - $3,500 = $10,625

or

$12,500 - $3,500= $9,000 X HST = $10,170

thanks all
1 reply
Deal Expert
User avatar
Jul 30, 2007
25733 posts
10779 upvotes
Toronto
(buyout + admin fees (if applicable) + inspection/safety ) + taxes = Gross - security deposit = net payable

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