I have a leased vehicle with 2 payments left. One dealership says they will take my leased vehicle as a trade in and I pay full tax on the new vehicle purchase.
2nd dealership says I will get a sales tax credit on the new purchase for the trade in value of my current vehicle they’d be taking.
Which is it?
I was set on buying my vehicle at lease end (and paying the sales tax) and selling it to carvana or carmax. But now I am not sure based on what the 2nd dealership said since it sounds like I’d have some tax savings trading it directly with them. Any help would be appreciated.
Thanks!
Correct. 10k car, 5k trade credit, you’ll be taxed on the 5k in Ohio. If I find time this spring break I’m not traveling due to covid, I’ll do a wiki writeup on sales tax to the best of my ability.
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According to this page on the State’s website (Question 3), you only get the trade credit if you own the vehicle you are trading in. You do not get the credit if you are leasing the vehicle, and the captive/bank
owns the vehicle at the time you trade it in.
And I don’t have to buy it first, correct? Who’s getting stuck with the sales tax when the lease lender transfers the title to the new owner which in this case would be the dealership. Maybe dealerships are exempt from paying it since they’ll make the next buyer pay it?
That I’m not 100% sure. According to the ohio site linked above you’d need to title it which is moot due to taxation on that. So if that’s the case - trade it to the highest bidder and use the cash as you please.
Yep sounds correct. That link clarified it. I assume VW is not allowing leased vehicles to be sold to dealers at this time?
To third parties? there is an inflated buyout, so yes but actually no.
Haha Carmax/Carvana it is then!
You have to look at the delta.
What is the savings of Tax but the loss of Equity if trading it in.
Slow down. Have you gotten a third party VW buyout quote, because carmax and carvana has a different price than a VW dealer or you do.
Your best bet is to trade it into a VW/Audi/Porsche dealer than Carmax Or Carvana since they’ll have a higher buyout price then what you have.
Ok. Didn’t know that. Lease buyout for VW Tiguan is $16,700. Carvana/carmax are in the $24,500 range. A VW dealership may be able to do better?
No, your lease buyout is that.
If Carvana/carmax tries to buy it, their buyout will probably be about $25k.
So the only way to probably get tax savings is take it to VW dealership and see if they give me something around $23k or so which would be close to carmax/carvana is offering after I pay tax on it.
You have two options here really:
Sell it to a vw/audi dealer (or someone affiliated with one, like equityhackr, autonation, rodo)
or
Purchase the lease, and then sell it to whomever you want
If you purchase it, you can then determine if it makes more sense to trade it in on a new vehicle for a tax credit or if it’s better to sell it to someone separate and forgo any tax credit, but take a higher offer.
Don’t forget, Driveway is owned by Lithia, which has basically every brand and captive under the gd sun - so they should be able to facilitate any buyout.
Aren’t they fairly regional though? Or do they operate everywhere?
So I submitted a quote to autonation and they came back at 24k. Tried to call the rep but had to leave a message. The questionnaire I filled out did not ask if it was leased. Should I assume that the buyout for a leased vehicle is going to be quite a bit less?
It’s a VW right? Then VW will add the ‘we don’t like Carmax fee’ and jack it up to probably over 24k.
Yeah VW. But earlier in the thread someone said that autonation and driveway had an agreement with VW for lease buyouts. So I’m hopeful it isn’t like you say.