Taxes on 3rd Party Buyout

if some company (CarMax etc) or even a dealer, ends up buying out my end of lease, are they paying the taxes?

like when I get a quote for say 25k on my 20k residual, am I getting a check from them for 5k and as part of them buying it from my lease holder (chase) they are paying taxes behind the scenes?

I have a friend who’s a used car dealer, he was like ‘ill write you a check for 25k, buy it and leave it on my lot, you won’t pay taxes until you go to register it, and since you aren’t, you wouldn’t pay them’. I don’t think he’s ever done it, so I’m not sure he is accurate in how this works

in CT if that changes things

just curious how it works, thanks in advance!

Your friend is correct. Dealers do not pay sales tax on it. The next registered owner will pay the sales tax.

They have what you’d call a resale exemption. Typically a business can buy goods for resale, not pay taxes and then collect taxes from the next buyer upon sale.

@ilike2breakthngs and @Jon thank you for the confirmation!