Leased Vehicles
Leased Vehicles
C.R.S. 42-1-102(66) reads in pertinent part “‘Owner” means a person who holds the legal title of a vehicle; or, if a vehicle is the subject of an agreement for the conditional sale or lease thereof with the right of purchase upon performance of the conditions stated in the agreement and with an immediate right of possession vested in the conditional vendee or lessee or if a mortgagor of a vehicle is entitled to possession, then such conditional vendee or lessee or mortgagor shall be deemed the owner for the purpose of articles 1 to 4 of this title.”
A vehicle owned by a leasing company/lessor, which shows an address other than the county of application, will be accepted provided that such leased vehicle is being titled and registered in the county where the operator/lessee lives. A copy of the lease agreement may be required.
Requirements for New Leases:
Ownership document – MSO, Colorado title, or out-of-state title properly assigned to the leasing company/lessor.
DR 2395 Title and/or Registration Application, owner (lessor) and lessee section must be completed.
Other documents required for titling (see Applying for Title)
DR 0026 Tax Receipt for Leased Vehicles is required on all leases except for the following:
Wholesale Leases
Existing Leases coming in from out-of-state
One-pay leases (will be reported through the DR 0024)
Leases under 36 months where all taxes are paid upfront (will be reported on the DR 0024
Note: The registration will have the lessee, showing the lessee’s address in the county where application for registration and title was made.
Tax collection on leases
36-month lease or less. The lessor must choose which method from below:
Pay taxes to Dealer/Lease company up front on a DR 0024; and processed the same as a sale of a vehicle (IE; Use taxes can apply)
Incorporate taxes into lease payments – requires a DR 0026 be submitted with lease paperwork.
Dealer/Lessor must have a Colorado sales tax account.
Dealer/Lessor must have a DR 440 — Lessor Registration for Sale Tax Collection on the rental or lease basis for each business location.
37-month lease or more:
Dealer/Lessor must have a Colorado sales tax account.
Dealer/Lessor must have a DR 440 — Permit to Collect Sales Tax on the rental or lease basis for each business location.
Taxes must be collected through the lease payments.
Lease paperwork will contain either a DR 0024 or a DR 0026.
Home Rule cities may choose between ‘Total Lease Amount’ or ‘Taxable Amount for Use Tax’ for tax collection on the DR 0026.
Cap Reductions
A Cap Reduction is simply a down payment on the lease and is now referred to as the “amount paid at signing and delivery” on the DR 0026.
The ‘Cap Reduction’ amount is taxed and shown on the DR 0026 Standard Sales Tax Receipt.
Local Sales tax may be remitted by check when a ‘Cap Reduction’ is being performed.
Lease Buyout
Lessee becomes owner.
Purchases vehicle for its ‘lease buyout price’.
Keeps plate and stays in the current renewal cycle.
New title is required, taxes are applicable.
Lien filing fee (if applicable).
Requirements for an Existing Lease from Out-of-state
Ownership document — out-of-state title, a current registration, or copy of out-of-state title or an MSO/MCO
Lease agreement may be required to verify lease information.
Requirements for a Name Change
Lessor (lessee remains the same):
Ownership document – title properly assigned.
License plates remain the same.
County may require documentation of lease information.
Lessee changes name (lessor remains the same):
A letter from the lessor confirming name change is required.
New lessee (lessor remains the same):
New lease agreement or letter from leasing company indicating new lessee name and address.
New license plates and registration required.
Proof of Insurance for new lessee.
New DR 0026
Subleases/Private Lease
See lease agreement to verify leasing company permits subleases or a statement on letterhead from the leasing company.
Sales tax is not due on a sublease transaction as long as the original leasing contract is in force.
Title and registration remain the same, the individual carries in the vehicle the original lease agreement or statement, the sublease agreement, and the original registration.
For more information related to sales/use taxes on motor vehicles please visit at https://tax.colorado.gov/motor-vehicle.
Government Lease Agreements
Vehicles which are leased by the State of Colorado or any political or governmental subdivision should be exempt any annual registration fees. The fees shall be exempt as long as the vehicle is used and operated in strict conformity with the lease agreement C.R.S. 42-3-104(2) and may be issued government plates as defined in C.R.S. 42-3-104(4).