I have a 2019 XC90 lease that is ending on 7/2/22. I’m in Michigan and this is my first lease, so I had a few questions.
I checked my buyout option and it’s sitting at $43,000.65, so I checked Carvana/Vroom which are offering me $50,000. Based on my research it looks like I would have to pay sales tax on both the buyout and the sale. If that’s true, I’m looking at 50000*.94-43600.65*1.06 = $783 - So barely profitable to go through that process right now. If I only have to pay tax on only one of these transactions, it would be much more viable. Does anyone know if I would have to pay tax on both?
Also, I have $8k in MSDs on this lease. When do I receive those back? Right at lease end/buy out or do I have to request them somehow?
Finally, If I end up just turning the lease in at lease end, can I go to any dealership? Do I have to do anything prior to dropping it off, like get an inspection or anything?
I do plan to get another lease of some kind, so as we all know deals are slim so I was trying to hold out as long as possible until I can find something relatively decent.
Thanks for your help!
You will pay sales tax when the vehicle is sold from VCFS to you.
When you sell the car to whomever, you will not pay sales tax.
Depending on the seller, you may receive a 1099 for the transaction.
MSDs will be sent to you via check, once the vehicle is bought out.
…or they can be requested as part of the payoff on the payoff form. And this will make buyout lower by $8K which should lower the sales tax, right?
Why would a MSD lower the sales tax? Is that some weird MI thing?
Because the sales price is lower …
You mean MI doesn’t see the MSD as a downpayment…which is not a taxable item hence you still owe tax on the whole thing?
They see the final payoff amount. How would they know it was reduced by MSD? I’d think one can just make an extra payment of a few thousands and then pay the buyout.
Oh! You are saying when you go to the MI DMV your payoff will show a lesser number.
Ok I can see how that would finagle the DMV into lower taxes.
They don’t see the RV - MSD they just see a Total.
The buyout will include sales tax already, unless it’s the upfront full selling price tax.
But I don’t know how it actually works because I don’t pay sales tax again.
What makes you so special?
Not sure how Volvo does it, but BMW says you will be taxed on the full payoff before applying MSD. Basically the bill of sale they give you will be for the full buyout and they just treat the MSD as partial payment towards the payoff, it doesn’t reduce the price they are selling you the car for.
Yeah, makes sense. No dice then.
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