California 10 day tax exempt For lease buyout

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Hi
I have looked thoroughly here and this topic has not been discussed.
In CA, you are allowed to payoff your leased car in order to resell it without paying taxes on the payoff IF you can sell it back and to a third party which would need to register the car within ten days of the original leasee recieving the title form the lessor company. BUT YOU HAVE TO MAKE SURE THE CAR IS TRANSFERED TO THE NEW ONWER WITHIN 10 days.

Now is the tricky part.
What if I payoff the car and sell it to s dealer? The new dealer would not register the car and I believe the car will remain under my name until they find a buyer for it. I believe they will hold on to the title that is under my name until the car is sold again. So I’m this case? Is the bill of sale enough for DMV for tax exemption? Because the car will clearly not be registered to a new owner.
If anyone here has payed off a leased car and sold to a dealer please share your experience

Why would you pay off the car if selling it to a dealer?

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This has been discussed plenty of times on here. In your situation, you don’t need to buy it. The dealer can take care of everything w/o you buying it and paying the sales tax.

Well the situation is more confusing. I have done that in the past several times including the previous Audi. HOWEVER it seems like Audi FS has different payoff quote for dealer which is presumably higher than my payoff quote. Hence the need for me to do this myself.
Look at the other tread I posted about that issue.
The higher dealer quote might only be valid for the last 90 days and I’m nowhere near that.
The last time I traded in my Audi I didn’t have this issue. With that car I was also not near the 90 day lease end. I called Audi FS yesterday and they said you were lucky last time around but I don’t buy that

Similar situation as discussed here:


But it seems like in this case the car was bought in the last 90 days of the lease

This a normal situation. Audi provides a lower quote to customers/Audi dealers who plan to buyout. If a third party dealer like carmax calls the quote is higher. You will have to buy the car out yourself and then sell to Carmax or another dealer. If you plan to sell to Audi or VW you should be fine as well.

The issue is that if I buy the car from Audi and trade in to a dealer I’d have to pay taxes on the car since the dealer doesn’t register the car until the new owner buys the car. I think they simply hold on to the title. In CA you have 10 days to transfer the title to the new owner with all fees paid in order to not pay taxes on lease buyout

No you don’t. Dealers are exempt from paying taxes till they resell. When you sell the car you file for a form with DMV, which doesn’t hold you liable. I am in CA and I have done the exact same thing. You have 10 days to register, if you sell it is the new owner’s responsibility, since they are a dealer, they have a way out.

So you are saying that you did a lease buyout and turned it around and sold to a dealer and dmv accepted the bill of sale and release of liability instead of the car being registered as the proof for tax exemption?
I wish they were a bit more clear about this since the law clearly states that the transfer of ownership needs to occur albeit they don’t mention anything about dealer transfer.

Also do you know what that form is?

I think it is form REG 138: Release of liability. When you buy out your car you get a title in mail. All I did was walk into CarMax with title and I was able to sell the car. The car was never registered to me. I think this is standard practice, CarMax guy knew about it common practice for German cars.

The car was already registered under your name when you leased it. If dmv was happy with the release of liability to be used for tax exemption then I guess I’m good. Otherwise it’s a 3k tax bill

Carvana is saying they won’t do it without me first having the title in hand. How can one get the title within 10d?

Reviving an old thread, I am facing same issue. Has anyone actually bought out their lease and sold it within 10 days?

Can you please share if you had to pay sales tax to captive and if you were reimbursed? How fast did you get title from captive and if you had to get a new one at dmv before you could sell it to carvana (or any other dealer)?

Haven’t done it myself but my guess is you want to do everything by overnight. I would do the payoff the day I got my quote from Carvana/Vroom

I spoke to my Bank that holds the title to my lease. They said I needed to submit a California Affidavit, stating I am not keeping the vehicle. Any idea what Reg form that is? They had no idea and could only give me that name/description. Thanks!

Here ya go!

And, some supporting documentation:

https://www.taxes.ca.gov/Sales_and_Use_Tax/ResaleCertificate.html

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Thank you so much! I just got off the phone with CarMax ( I am selling to another dealer FYI) and they said to just use DMV Reg 101, which doesn’t look right and they called it Statement of Facts, which is Reg 256. A bit confusing especially since the Bank doesn’t specify what they want.

I bought out my lease, did not sell it within 10 days. However, I went through the CA Dept of Tax and Fees and got a Certificate for Use Tax Exemption. Showed that to the DMV, didn’t have to pay taxes on the buyout. My registration was coming due, so I filed a Non-Op (only $23), and am now waiting for DMV to issue a clean title in my name.

Although my registration is not due until next month (July 8, 2021), they are saying I need to pay $439 to issue the title, an amount I have no idea how they came up with. AFAIK, it’s $15 to issue a new title in CA; only thing I can surmise is that they’re adding the registration fee (math adds up), so maybe the Non-Op payment I sent via snail mail hasn’t posted yet.

I have been on hold with them for 2 hours so far today trying to get an answer, and they are not responding on their Virtual Email system, which has worked pretty well so far.

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Would be interested in which form you filled out (CDTFA-106)? How and where did you get approved… tried getting some guidance by calling the CDTFA office and they told me that most likely it won’t get approved unless you have a reseller permit.