I’m in NY, coming out of a Chrysler capital lease, and my buyout is $25,xxx, after tax it’s $27,xxx.
I’m trading it in early and my dealer is buying it out of the lease to give me some equity towards my new lease. However the dealer is now telling me that they have to pay the same sales tax as me on the car, and essentially I’m getting 2k less then originally thought. They are saying “we have to pay tax too” on buying out my current one. Is this true? Please help.
That is absolutely false. The dealer purchase is a wholesale transaction, and not subject to sales tax.
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What @jay3 said
Even if you have equity? I thought that its basically, you buy the car from the bank, and then immediately resell to the dealer? It’s not a lease return cause OP has equity. That’s happened on a BMW 3 weeks ago.
That might be the case with a bank not allowing 3 party buyout, not CCAP
They are really saying, lets screw with this guy for some percentage on his trade in, lets call it Tax Money.
Your bank is CCAP which is the nicest bank to do a trade in.
No. If the captive allows for third party buyouts, the dealer is able to purchase it directly. If the captive does not allow third party buyouts, then the option for you to purchase, pay tax, and resell exists. If a BMW is buying a BMW Financial car, then that is not a third party buyout.
I have a relative who dealt with something similar 2 or so years ago with CCAP. Technically, as most others have stated, no you do not owe sales tax. However, a lot of investigation revealed that CCAP likes to penalize you with a fake “sales tax” when you try to sell (I believe) 60 days or less from your lease end date. We tried all of the buyout options from Carvana to local dealers and every time it was the same story just told a different way but the gist was CCAP was telling them the lessee owes $x.xx for “sales tax”. We took it as high as possible but was never able to resolve it in the end. Many agreed the logic was wrong and no sales tax was due but they stuck to the script about the 60 day window.
In my eyes it was a slick way to screw over the unsuspecting customer at the end of their lease when so many dealers were buying leased cars for inventory and CCAP would lose their dispo fee & any damage charges. I’m sure they stuck with calling it sales tax so typical people were none the wiser and just assumed they in fact owed taxes on what they were “selling”.
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What if autonation buys the BMW leased through BMWF? Does autonation pay taxes since they’re allowed to buy out the car?
No. Autonation has a BMW dealer.
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