Double Taxation? Subaru Finance 3rd Party Coming Off Lease Purchase in State of Michigan

Not even sure how I search on this topic, but running out of time. Hoping someone can provide an optimal approach.

Looking to purchase a vehicle from a friend (confirming NOT a relative). Subaru Finance/Chase bank sent him the lease buyout price and that included State of Michigan sale tax of $1,000+. Title MUST be in his name. SO, when next buyer comes around to purchase the car, let’s say a matter of minutes upon my friend receiving the title, the next buyer must also pay State of Michigan sales tax?

Subaru Financial/Chase bank saying 3rd party won’t have to pay sales tax. I just got off the phone with MI SOS and they’re saying they will have to pay sales tax given the scenario I outlined. Doing some research some states allow for sales tax to be waived for 3rd Party lease buyouts, but I found nothing definitive for State of Michigan.

I would contact the local Subaru dealership for advice but they’re all closed and not picking up the phone or responding to emails.

CRAZY to think this is an automobile sales tax double dip?!? I consider the State of California Tax Crazy compared to Michigan, but even CA allows for 10 days tax free.

Try calling Subaru motors finance (chase bank) again and specify state, and mention what you were told.

Every state does it, it’s just a sales tax on a used car, which could be infinite.

Called Subaru Motors Finance, twice :-o. Both times 1:20+ hours on phone waiting. It’s the new normal. First call, my buddy explained the purchase scenario and we were told no taxes for follow-up purchase and the would send over purchase paperwork. Four days later no purchase paperwork, just lease extension paperwork so call #2. Next CSR said there is double taxation, offered to fax payoff information, AND mail-out paperwork. In both cases, going to a dealership was an option, BUT Michigan dealerships are closed at the moment due to state lockdown. Further, Subaru finance could not offer what the dealer would charge for what I consider paperwork shuffle.

Supposedly dealerships are opening up again this Monday so we’re not sweating it too much. If anything I’d like to be prepared and hoping someone in the forum has navigated these waters and has some advice. I realized we can go to ANY Subaru dealership. Maybe shop around? I tried calling an out of state dealer, Peoria, AZ and they didn’t offer such a service. Wish us luck!

Just a quick Google search, turns out California offers 10 day grace period for 3rd party lease purchases. Doesn’t look like State of Michigan offers such a thing :frowning:

Do you trust your friend? See if you qualify for this tax loophole. :grin:

Full honesty, nobody here knows what the flying f##k is going on right now. Every dealer manufacturer and more is different. BMW dealers in my state will do out of state deals but no documents and online viewings but no sales, others like WV are open with no out of state.

It’s a FUBARd 7 ways to Sunday. My local Merc dealer is full closed, as well as the bimmer but some service depts are open. Blanket answer is do some legwork and look at every dealer in the area. Also is the buyout even a good price? Take a peek at blue book before you buy.

TOTAL FUBARd 7, that’s for sure. Blue book and condition of the car, AMAZING. 13,000 miles, and driven to the local library.

LOL, one of my all-time favorite movies.

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My gut says you’ll both pay tax on it

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That’s my default “gut check” but maybe someone on the forum knows a better way? :slight_smile:

I think he has to buy it officially and pay the sales tax at that point. Then you’ll buy it from him.

I do wonder how many times California DMV has actually managed to get a title to someone within 10 days of receiving a pay off.

I doubt they actually issue a title until the 3rd party registers tiger car.

CA has no way of knowing that there’s a third party involved when you buy it out from the bank… (obviously this is different than when a dealer buys it out from the bank)

So theoretically a lessee pays off the car, receives a title from lessor, then within 10 days transfers the car and title to the 3rd party, which may require them both visit the dmv. I would imagine that how it would work out.

Correct, as per the sales law in California. Michigan, there doesn’t appear to be a similar rule. Hoping someone proves me wrong :frowning:

I imagine that’s how it’d have to work out, but that would require the lessor to contact the dmv to initiate the transfer and the dmv to process it and get it shipped out all in 10 days.

I’m sure it’s happened before… but with thousands of dollars on the line, I’d be really hesitant to trust the CA dmv to be that efficient.

In this case, Subaru sells and titles the car to my friend. My friend then turns around to sell to me. There is a paper trail that can be used for CA DMV, BUT I did read it’s not the smoothest process. At least there is a process, unlike what I’m finding here in MI.

The lessor holds the title when they buy the car from the dealer. They don’t need to contact dmv.