Lease end equity, sales tax considerations

Ask the Hackrs
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1

Hi,
Can a dealer purchase my car directly from the financing company at the end of my lease for the residual+lease disposition fee and not have to pay sales taxes?

For example let’s assume residual+lease disposition fee is 40k and I find a dealer willing to pay 42k for the car. And finally let’s assume sales taxes are 10%. Can the dealer give me 2k towards a new car. Or will the sales tax make the lease equity vanish? I.e I have to purchase the car for 44k after tax before selling it to the dealer for 42k.

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2

Dealers are tax-exempt and do not pay tax when buying vehicles.

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3

Sales tax question aside, this part of the question has different answers depending on who the lessor is on your current vehicle, and then potentially by the brand you’re targeting for your next lease.

4

What car and what Leasing company?

5

Volvo, NY state, VFCS leasing

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A volvo dealer can take it as a trade in on a new volvo. Otherwise, no, a dealer can’t buy it.

7

Volvo is one of the worst for squeezing equity out. They are in line with Ally and US Bank.

So you have to buy it and then sell it, and lose taxes and time and possible equity value. Unless you want another Volvo

8

In this case i would be seeing if a volvo dealer could purchase from VFCS without paying sales tax and hopefully generate a little equity for me assuming i would roll it into a new Volvo.

9

TBH. Do not expect any equity on Volvo these days unless you did half of the miles from lease contract