Hi all. I live in CA. I bought out a 2018 Toyota Camry lease (no sales tax/use tax charged) with the intention of reselling it to Carmax. What I did not know before reading this forum, is that Carmax could have bought the lease directly from Toyota Financial Services. This would have prevented me from having to do all this legwork, and possibly paying the use tax.
I have received the Certificate of Title from Toyota (Toyota as the lessor, and me as the lessee), and a Vehicle Transfer form (Reg 262). From what I understand is that Carmax will not purchase the car, until the title is in my name - is this correct? But once I go to the DMV to transfer the title, I will need to pay use tax then - is this also correct? Not to mention, the process of getting a new title (and registration) will probably take more than 10 days. Which means, I won’t be able to sell the car to Carmax before 10 days is up, and thus would not be exempt from use tax anyways…
Is there any way to avoid the use tax besides selling the car to an individual? Any information I am mistaken on? Thank you in advance.
The link above has a ton of information on this process specific to CA.
There are a couple of places in CA that will buy the car from you on the REG-262 form. I believe Vroom is now one of those places, as long as you have a lien release letter from TFS (pretty easy to get and may already be in your docs package that they provided with the title).
In addition to what’s already mentioned earlier by others, check with carstub.com. They have in-house DMV department and should be able to handle your scenario.
Thank you everyone for the replies. Everything is new information to me, and very helpful.
Just an update - Went to Carmax today, and can confirm they will not buy my car with just the Certificate of Title from Toyota (Toyota as the lessor, and me as the lessee), and a Vehicle Transfer form (Reg 262). Everything needs to be transferred into solely my name, in order for me to sell to them. Earlier, a Carmax phone rep had told me otherwise, hence my field trip to discover the truth.
I will check out other dealers (e.g. Vroom, carstub) too, since I do not have a third party lined up. I also might just bite the bullet and pay the use tax, since Carmax is providing the highest quote so far. True the quote may change by the time a new title and registration arrives. In the end, even paying use tax, and document fees, I will still walk away with profit, so I can’t complain. Chalk this one up to a learning experience, and this car being my first lease. In the future, I will definitely have the banks (e.g. Toyota Financial Service) deal directly with the dealers (e.g. Carmax) if I want to buyout a lease for resell.
Yes. As mentioned, I do not have third party/private party buyer in mind (especially within 10 days). Ideally this would be a friend or acquaintance, so that the “chicken and egg problem” (i.e. buying car without title) would not be a big deal.
My plan had always been to resell to Carmax, since I’ve had a good experience with selling to them in the past. But at least now I’m aware of different options and what they require from the article. Very informative, thanks!
If you can stomach letting the car sit until the new title arrives, you can then sell it to Carvana and apply for a refund of the taxes using CDTFA-101. There’s a 10-day limit, but supposedly the CDTFA is lenient on this because they know the DMV doesn’t process fast enough to actually meet the 10-day requirement.
