If an agreement includes a bargain purchase option, but the lessee is not required to exercise this option, does the agreement still constitute a lease for New Jersey sales tax purposes?
If the agreement requires transfer of title and the price does not exceed the greater of $100 or 1% of the totals required payments, it is not a lease under the new law, therefore, it is taxable as a sale. If the agreement does not require transfer of title, but has a bargain purchase option, the Division has always treated such transactions as sales rather than leases, and will continue to do so.
Related Questions
- If an agreement includes a bargain purchase option, but the lessee is not required to exercise this option, does the agreement still constitute a lease for New Jersey sales tax purposes?
- Do I lose the option money if I dont exercise my right to purchase before the lease is up?
- What is a Residential Lease Agreement with Option to Purchase?
