I see. In your Ally online account, there is a chat option, I was following up with them through that mostly. It was less painful than dealing through phone. Once your payment is applied, they say it takes only 2-3 business days for the next step(docusign). But, mine was a full week. They gave me the number for the buyout dept to check , but it never got connected. And again, when the buyout dept person called me, she read my name on check wrong and assumed it was from a third party and was telling me she will send back the check. Probably that could have delayed. Anyways, she realized the mistake and went ahead.
Did you pay tax on the buyout?
No. The buyout quote from Ally doesnât include tax. You are supposed to pay tax only when you visit DMV to transfer title. For this sale, I sold it to Shift with the original title itself, that too within the 10 days period.
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Question for you guys Iâm positive my Mercedes payoff doesnât include Cali tax, but Iâm selling it to a Private Party. Since I will get the title first am I exempt from the sales tax portion since he will be registering the car?
Charlieo answers this exact question in an earlier comment in this thread - California 10 day tax exempt For lease buyout - #58 by Charlieo
So, the answer is No. you donât have to pay sales tax if you do the transfer in 10 days. I think, itâs a good idea that you and the buyer visit DMV together and ensure all happen smoothly once you have the title in hand.
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@socalguy - did Shift say the transaction had to be done within 10 days of the date of sale listed on the title from Ally? Or did that not matter to them as a dealer? My experience getting the title from Ally took much longer than yours (I didnât receive the title until well after 10 days from the date of sale), so wondering if they (or other dealers you investigated) said anything about it having to be done in the 10 day window. Hoping to avoid the whole exemption hassle.
No. I did not specifically ask them this question. My guess is that it doesnât matter since they are a dealer.
By the way, I had a call with CDTFA office in May before proceeding with buyout. They said the rule says 10 day period kicks in when you âacquire the title from lessor.â The officer interpreted it as starting from the day you receive it. So postal delay doesnât matter if thatâs the case. However I think itâs safe for you to have a proof that you received title on what date. If you have USPS informed delivery notification, thatâs helpful.
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Keep in mind that the sales tax issue is between you and CA and pertains to your purchase from Ally.
Shift or whomever purchases the car from you after that has no say or involvement in what tax you pay. If you ask them about this, all theyâre going to do is look at you funny.
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I just finished this insane CA lease buyout sale process for my 2020 Volvo XC90, and because this forum has been so helpful to me in navigating it, I also thought I would share a timeline.
tl;dr - Vroom overpromised multiple times they could do this transaction, and they ultimately could not; CDTFA gave me a run around for weeks and ultimately denied my tax clearance application because of the 10 day rule; I ended up selling to My Car Auction which offered a decent price and could accept the lessor released title. My takeaway: find a dealer (online or in person) who can do the lease buyout directly or accept a lessor released title, otherwise youâre likely in for weeks of stress. This process has been awful, and I donât wish it on my worst enemy.
5/23 Sun - Received an offer of $49,176 from Vroom for my Volvo; agent confirmed they could do a Volvo lease buyout (Carvana said they cannot work with Volvo and offered less anyway)
6/1 Tues - Called Vroom to check on buyout status; agent indicated their acquisitions team could not facilitate the lease buyout with Volvo and closed the account; agent indicated they would be able to purchase at the original offer price if I bought out the lease myself
6/1 Tues - Obtained a cashierâs check and overnighted to Volvo for lease buyout
6/4 Fri - Volvo online account showed status as paid; Volvo recorded 6/4 as âdate of purchaseâ
6/11 Fri - Received an âodometer disclosure statementâ in the mail from Volvo requiring me to sign and fax back to Volvo (wow, a week delay and weâre using fax for this??)
6/11 Fri - Faxed odometer disclosure statement to Volvo
6/18 Fri - Volvo signed the title releasing their interest in the vehicle and processed the title for mailing
6/25 Fri - Received the lessor released title (dated 6/18) and bill of sale (dated 6/4) in the mail from Volvo; lessor released title names âVCFS Auto Leasing Coâ as well as myself and my wife; VCFS has signed away their interest in the vehicle on the title
6/25 Fri - Uploaded lessor released title to Vroom; called Vroom buying agent who confirmed receipt of title and said contracting should be in touch
6/28 Mon - No word from Vroom on the 10th day since title received - feeling nervous about the 10 day rule; applied online for a use tax clearance certificate (CDTFA-111), submitted supporting documents (scanned copies of lessor released title, Volvo buyout offer, cashierâs check, proof of intent to sell vehicle through advertisements and Vroom correspondence) and received a CDTFA confirmation number
7/2 Fri - Called the Oakland CDTFA office to check on clearance certificate status; receptionist provided the number to an agent; called the agent three times with no pickup; left agent a message on 4th try (no call back)
7/2 Fri - Called Vroom to check on contract status; agent indicated contracting team closed the account without any notation; agent was confused and reopened the account and resubmitted documents, indicating contracting should be in touch within 2-3 business days
7/4 Sun - An online CDTFA agent emailed about the tax clearance certificates and indicated âI am not understanding your requestâ and instructed me to read âPub 52 which I have disclosed the link below and if you still feel that you qualify for a clearance please send in the appropriate documents.â
7/5 Mon - Emailed CDTFA agent pointing to relevant CDTFA website indicating tax clearance eligibility for âTransfer of a Vehicle to Lessee by Lessor for Purposes of Resaleâ and pointed out that all documents have been submitted online
7/8 Thur - CDTFA agent requested bill of sale from Volvo; replied to email indicating I was travelling but would send over the weekend
7/9 Fri - Called Vroom to check on contract status; agent said account was closed again by contracting, transferred me to contracting agent; contracting agent indicated that Vroom cannot acquire the vehicle without a fresh title with only my name and that the title must be held in my name for a minimum of 14 days before they can issue the contract; contracting agent did not know why acquisitions team has this policy and cannot accept the lessor released title
7/11 Sun - Emailed CDTFA agent with Volvo bill of sale
7/15 Thur - CDTFA agent said they need the bill of sale from my contract with a buyer; I indicated that in order for me to sell to a private buyer, I needed the tax clearance certificate first to get a fresh title and not pay sales tax, after which I will contract with a buyer
7/16 Fri - CDTFA denied my tax clearance request indicating: â2. Seller purchased leased vehicle, 2020 Volvo XC90, on 06/04/2021. 3. See attachment, received email from Seller dated 07/15/2021 stating he has not resold the vehicle and current location of the vehicle is his home address. 4. Test period expires on 06/14/2021 due to the applicable regulation. 5. Request for a tax clearance denied. Seller is still in procession of the 2020 Volvo XC90 41 days after buying out the lease and have not resold the vehicle within the 10 day test period.â
7/16 Fri - I relisted the Volvo on Craigslist for $48,500; received a call from www.mycarauction.com who said they can purchase the car with the lessor released title for $47,000
7/17 Sat - My Car Auction buying agent came to my house, inspected the car, cut me a company check for $47,000 and scheduled a vehicle pickup; my wife and I signed a title transfer form and I signed the lessor released title releasing our interest in the vehicle
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I donât understand, so you didnât have to go thru the CDTFA? or because it was beyond 10 days you had to pay the sales tax?
Because taxes are triggered when you go to the DMV and apply for a new title, you donât have to go through CDTFA if you sell to a dealer that is able to accept the lessor released title. The problem (which I learned the hard way) is that many of the online dealers (Vroom, Carvana, etc.) will not process the lessor released title and will require you to go to the DMV for a fresh title, despite what front line salespeople might tell you (the acquisitions team at those online companies are the folks behind the curtain making the decisions). In my case, My Car Auction had no problem taking the lessor released title. When I told them I was having trouble with CDTFA, they looked at me funny and said, âyou donât owe sales tax on cars you buy in order to sell.â Well, if youâre a dealer, yes, but for us individual consumers, itâs more complicated. But finding a dealer who can take the lessor released title means no trip to the DMV, no new title, no tax collection. I was attempting to get a CDTFA tax clearance so I could get a fresh title and sell to Vroom or an individual buyer, but finding My Car Auction solved my problem.
I suppose itâs possible someone at the DMV takes a close look at the lessor released title and sees that Volvo signed it in June and I signed it in July, but the odometer mileage didnât change and dealers are allowed to hold on to cars while they wait to sell them.
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Dude you are a life send. I was in my way home from CarMax miffed because they want the title without the lease company so I canceled the appraisal. Then I read your post and my car auction will match the carmax quote which is about $1k more than their quote so I am back at CarMax getting a fresh offer. Talk about hoops. I wonât celebrate until I have the money in the bank. Leasehackr ftw on buying and selling
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OMG, reading your timeline feels like watching an episode. Glad to see that you finally sell your car w/o paying tax. What a highly stressed process!
Holy cow I guess Iâll pay $1500 tax for my Volt buy-out and hope for a break-even selling later, canât afford going thru this process lol.
Congrats and hat off to your patience!
What is the process for getting the paid sales tax back?
I highly recommend mycarauction.com. Someone else in this thread used them. They come to you, match your carmax (or other) offer and went above, and they have no issue with the title from the leasing company. They hand you a check, wait for it to clear and tow truck comes to take the car. Could not be easier.
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Not sure if this is discussed anywhere else. Just curios on the income tax implications of the scenarios where you sell a car at a profit
- You did a lease buyout. Although it was a leased car, there was a bill of sale from lessor to lessee. Then another bill of sale from lessee to a third party. If there is a profit from this transaction, are we supposed to paying income tax (Federal and State)?
- Now, letâs say there was no lease involved in the first place. It was a car you bought many months ago brand new. But, now you see you can sell it at a profit. Are we supposed to pay tax in that case?
An article from Cargurus says that there is income tax involved. But, there is no clarity on leased car when you do buyout and sell.
Understanding Taxes When Buying and Selling a Car - CarGurus.
If your net equity exceeds your total lease costs to date, then yes, you likely owe capital gains on the delta between those two values.
This has been debated here previously, including looking at the specific language in at least some statesâ laws regarding where the cost basis starts if you lease, buy out the lease, and then resell.
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Would you recommend mycarauction.com? Iâm thinking about selling to them but I wanted to make sure they are legit before going forward.
Highly recommend. Smooth process, their $47k checked cleared the bank no problem, and they sent a truck to pick up the car the following week after the check cleared. Zero issues.
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