Lease buyout then resell to a third party. Anyone done it?

I have a buyer who would like to purchase the car at lease end for the buyout price. All sounds oaky except the sales tax / DMV registration here in CA. There is a sales and use tax law would allow you not to pay sales tax at the time of lease buyout if you sell it within 10 days - your third party buyer will pay when he registers the car. This sounds good but how does it work? What happens at the dealership when I purchase the vehicle? Will dealership sell me a car without me paying sales tax? What about registration? Does anyone here have experience with this? Thx

why don’t you call the dmv?

IIRC, you pay sales tax and apply for reimbursement within 10 days.

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Hmmm… I see. Thanks! Trying to find more info on this.

That was a joke, right? Calling DMV…=p :sunglasses:

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So far… what I am actually finding out is quite simple.

I pay the leasing company directly (with fund provided by the buyer) - only the vehicle buyout amount. When the title arrives, buyer and I go to DMV and simply transfer the ownership. I do not pay tax at all the the buyer pays the use tax at the time of transfer.

I’ve had no trouble calling the california DMV and getting answers. sometimes have to wait on the line for a bit, but honestly, just keep my headphones on and wait for them to pick up, not usually much of an issue

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Cool~ maybe I will actually try that :hugs:

My friend has done it recently in CA. He paid the company the payoff amount. He got the title (pink slip). Then its like regular sale - you sell the car to the buyer. I think the only important thing is that it needs to be done within 10 days.
Then the new buyer goes to DMV and registers the car in his name and pays the sales tax.


Here is the regulation: 6277. Presumption on sale to lessee. There shall be a presumption that a transfer of a vehicle to a lessee by a lessor, as defined in Section 372 of the Vehicle Code, was a sale for resale if the lessee transfers title and registration to a third party within 10 days from the date the lessee acquired title from the lessor at the expiration or termination of a lease. The presumption may be rebutted by evidence that the sale was not for resale prior to use.

The third party would pay the tax when they register it. Now, if you sell it to a blood relative, you can get an exemption form from California Department of Tax and Fee Administration. CDTFA-106 along with a birth certificate and registration. If you sell to a family member within 10 days, nobody pays the tax. Little known loophole.


Wow. That’s a great “hack” if really true.

I had a big problem trying to buy out lease for resale at Nissan dealership. I had all the documents from Board of Equalization outling the procedure for dealers but they were convinced that if I did not sell within 10 days, they would be liable for the sales tax and they would have to sue me in order to get it back.

Has anyone had luck just paying sales tax and claiming it back (in CA) and if so, who do I contact for refund and how long does it usually take?

Many thanks!

Shouldn’t you be dealing with NMAC instead of some rando at a dealership?

Contacts NMAC and they said that in California the sales has to be processed via a dealership :-\ … Dealership charges fee for this but still the sales tax problem.

Aaron, I have done it many times and never paid sales tax on it in CA. The buyer does. NMAC may have different policies though than BMWFS and MBFS.
Once I agreed on a price with the buyer I contacted the lease company for a payoff quote (online) and sent them a check. They returned the title. I turned the title over to the new owner to take it to the DMV where he registered the car and paid the full sales tax. There was no dealership involved but as I said - NMAC may have different policies.

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You can do that, but it shouldn’t be necessary.

I’ve contacted a few deals now and all are saying they have to charge sales tax regardless what Board of Equalization says. Can anyone advise the process to claim it back?

Can you have a dealer sell the car to your buyer and charge him the tax? They can’t possibly need to collect it twice.

They said they could sell it to the buyer but I would need to remain on title as I am the only one who can buy out the lease. I would then be removed from the title later. Thats creates a problem as buyer wants to finance via loan and they would have a problem me being on the title if I’m not on the loan.

I would call NMAC again and ask for a supervisor. What you want to do is payoff the lease without paying the tax and get the title or lien release (probably a lien release in CA). Confirm if it’s mandatory that you deal with a dealer.

I can’t imagine that a dealer has to title it with your name on it at all. You should be able to pay it off and have them title it in the name of your buyer (ask NMAC about this).

You can call the CA State Board of Equalization about getting a refund. But that would be after a dealer sells it you, right? That makes no sense.