Previously leased vehicles in Massachusetts explained.

The sale of a previously leased vehicle directly to a lessee using a “purchase option” under a lease agreement is subject to use tax in the state of Massachusetts. However, previously leased vehicles that are sold directly to a dealer for third party resale or at auction are exempt from Massachusetts sales and use tax if the purchases are made “exclusively for resale in the regular course of business”.” Also, the sale of a vehicle used in the operations of the leasing company are exempt as long as they are used exclusively for lease and rental purposes until they are sold. Each of these exemptions apply regardless of who makes the sale, the lessor or someone serving as an intermediary. (Letter Ruling 02-10, Massachusetts Department of Revenue, October 31, 2002)

Posted on March 15, 2003