I think this is a pretty specific question but I’m hoping someone would have the answer. Sorry for the length. I found a vehicle that I like out of California. I am in Arizona. The vehicle is leased through BMW.
I’m specifically looking for private party purchases because in AZ I do not have to pay sales tax on a private party purchase witch would save me about $5k. If I purchase a current lease through BMW and their lesee I assume that would be considered a retail purchase and I would have to pay taxes on it. I found a car I like but found out it’s a lease. The leasee was told by BMW that in CA if he buys the lease out he has 10 days to sell it without having to pay taxes. So, he is planning on paying BMW (he has the cash) and getting the title in hand once he has a buyer and signing the title over within that 10 days (I assume he’s doing this because the current lease payoff is lower than the selling price but whatever).
Then, I would pay him since the title has the lien release attached (or maybe flipped to his name) and the bill of sale would be with him. Basically BMW NA would be cut out of the deal. It’s basically a private party sale at that point. And he would not have to pay taxes because he sold it within 10 days to an out of state buyer.
When I go to register the vehicle in AZ will I have to pay taxes on it? It’s a private party purchase with no taxes ever paid on the lease buyout. Is this a loophole or am I or him going to be stuck with a tax bill in the mail? THanks
If what you say is true (no taxes due on a private party purchase in AZ) then you should be good to go.
He is buying the car from BMW. Then you are buying the car from him. As far as the AZ taxes are concerned, a private party sale is a private party sale, they won’t know/care whether the seller had the car for 5 days or 5 years.
However, I would double check that the “no taxes on private party” thing includes out of state purchases.
Thanks Jeff. You do not owe taxes for private party purchases even when purchased out of state. Here’s a Q&A document about it from the AZ department or revenue. I don’t believe it specifically discusses out of state purchases but I do know the answer to that.
Just remember to factor in the cost of time/energy as well as money if you go forward with this. Are you willing to wait for 2x pandemic-era bureaucracy at the DMV and at BMWFS?
Because, AFAIK, your plan requires waiting for a clean and clear title in his name to qualify as a private party transaction. So it will happen in two stages: BMWFS sends him their title, which he takes to the CA DMV, fills out the paperwork and gets a new title in his name. Do CA DMVs print titles on the spot or do they come in the mail from some central location X weeks later?
