Sell lease to private buyer ... sales tax in NJ? (Ally)

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Hi Everyone!

I have my Alfa Giulia listed here and on SwapLease, with a few people “waiting” for Ally to restart the lease transfer process.
While I wait for Ally, I have been asked this morning if I am open to sell my car vs. transferring the lease. I’d be happy to do so as I’m not looking at any profit, but really just get rid of the car as I’m not driving anywhere.

Here is the $1M question: how does it work with taxes? I live in NJ.
I researched and went through all the existing threads here on the forum (CA 10 days, etc.), but I really wasn’t able to figure out the correct answer. I can call the lovely DMV … but 1) they aren’t open yet 2) I want to do my homework first

Example with numbers “rounded up” to make it easier:
ALLY BUYOUT AMOUNT: $31,500
SALES TAXES: $2,500
ALLY BUYOUT: $34,000

CARVANA: $25,000 (Real)
VROOM: $26,500 (Real) --> Through some “negotiation”, I was able to get the Vroom person telling me the 3rd party buyout
3RD PARTY BUYOUT: $31,500 (same as mine)

POTENTIAL BUYER: $31,500 (that’s also the average KBB/Edmunds/etc. so ok with it)

Does anyone know how (if?) I can make the above work in terms of timing, so that we don’t end up paying sales taxes twice?

I also read that someone recommended to find a dealership to “help out” and be the third party… but as I am not looking to get into a new car for now (probably until 12/2020), it’d be hard to get someone just to do me a favor … any thoughts?

Thanks in advance!

2

Not worth selling since you have 5 to 6k negative equity.

3

As stated above, I’m not planning to sell to Carvana or Vroom as yes, I have negative equity and it’d be really stupid to do that.

The assumption with the numbers I listed is that I’d be selling at “retail” price (>buyout price), and so I was wondering how it could possibly work with sales taxes.

4

If you sell the car to a licensed dealer, the dealer won’t pay sales tax on the lease buyout, but you (the seller) usually won’t get a sales tax credit on the new purchase. If you buyout the car yourself, you will need to pay the remaining sales tax owed but, if you trade it in, you will get a sales tax credit against your next vehicle.

It’s pretty much that simple. If you sell to a private party you have to pay sales tax on the buyout && you won’t get any sales tax credit for a future vehicle purchase.

1 Like
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Thank you! That’s what really I was looking for as confirmation. I saw something for CA and other states, so I wanted to make sure there was nothing more for NJ.

6

Hello, i am in a similar situation with my lincoln lease coming to end next month and market value of car higher than residual value. i am trying to figure out my options and want to look at other non lincoln cars at this point. i am in NJ and would appreciate help. thanks

7

Don’t ask the same question across multiple threads.