You are in CA, buy it , and sell it under 10 days to your dealer friend. No tax.
2 Likes
Be sure to work out all the details of what it takes to do that first. I’d hate to get caught holding the bag for thousands of dollars in tax liability because CA dmv couldn’t get their job done in time.
3 Likes
See what @mllcb42 posted above 
And yes, banks do have it figure out and has been the case for awhile now. It’s their asset, and they’re cashing in on it. Same with Ally, Audi, VW…
I’d be curious how long the whole process would take. In Virginia we pay tax on whole car up front so there is no tax penalty for buying out lease. I wonder how long it would take between submitting buyout payment and getting having needed paperwork to sell to CarMax/Carvana/etc… Can you ever get the title and have DMV take needed action within 10 days? Seems like just getting title in mail would take a week or two.
This is the part that always concerns me with this plan. I’m also unclear if the 10 day clock starts when you pay the bank to buy out the vehicle or when dmv issues the new title. At least if it’s the latter, you cut off a bit of the calendar.
1 Like
“Generally, when a lessee elects the option to purchase the leased property at the expiration of the lease, tax applies to the sale of the property when the option is exercised. Nevertheless, if the lessee transfers title and registration for a vehicle to a third party within 10 days from the date the lessee acquired title from the lessor at the expiration or termination of a lease it is presumed that the transfer of the vehicle to the lessee was a sale to the lessee for purposes of resale. The presumption may be rebutted by establishing that the lessee made a taxable use of the vehicle prior to the time that the vehicle was resold to the third party.”
As I understand it, you have 10 days to complete the process from the day you receive the title in the mail from the leasing company. The best way to complete this is to get a CDTFA-111 exemption (you will need a signed bill of sale from your friend for this), and then use a REG-262 form (multiple transfers) to transfer the original title from your name to your friend’s name without applying for a title in your name.
The only other important thing to understand is that the odometer disclosure you submit to the leasing company had better match the odometer disclosure you fill out on the REG-262. If they don’t match, it means that you drove the car after you bought it but before you sold it (and thus owe sales tax on the purchase).
3 Likes
So this is where I’m unclear. If you buy out the lease, does the leasing company send you the title, in their name, for you to take to the dmv to complete the transfer like if you did a private party purchase or does the leasing company process the paperwork and the dmv sends you a new copy of the title in your name?
It’s the same as a private party deal, yes. The leasing company sends you the original title and you take it to DMV and pay the sales tax there.
The other way to take advantage is to lease again through US Bank. The dealer will get the lower payoff amount and then you can roll the equity into the new lease or cash it out. The downside is you are pushing the inevitable pain of returning a lease with US Bank down the road, but the good news is you will get the equity.
I cannot understand people complaining about a windfall in the form of an option that’s in the money.
Count your lucky stars your lease came with a free option (one that didn’t require any extra payment) granting you and only you the option to buy this vehicle for well below its current market value.
Go look at any other asset class like stocks and see if anyone will give you options for free. And they end up expiring worthless half the time.
1 Like
Been dealing with Vroom and trying to sell my 2018 VW Tiguan. They quoted me an offer of about $5k more than my payoff amount and it was also more than Shift, Carmax and Carvana. Started the process almost 2 weeks ago and finally got an answer back last Friday. Vroom is a hot mess, but that will be another thread. Anyway, I knew that the 3rd party buyout amounts were going to be different than what my personal buyout would be. What I didn’t expect was that it was going to be $5500 more! What TF Volkswagen Credit?! Basically Vroom wants me to pay them $500 to buy my car. I cancelled this deal immediately. Just doesn’t make sense. Anyone else experience a crazy delta between personal leasee payoff amount versus 3rd party?
Unfortunately, this is expected from VW. Various folks in this forum have reported the same exp. You might still come out with positive net after purchasing the car and selling it directly to carvana etc. GL!
and
Ugh, thanks!
Thank you!
The option is not free. There’s lease acquisition and disposition fees, and oftentimes the lease MF is higher than purchase financing.
1 Like
Often times it isn’t too
My Tiguan is a year old and my lease buy out quote stands at 21k. I tried to use this to cash in with carvana as they are offering me 27k!
However when carvana received their figure from vw it showed 28k hence putting me back in the red. Caravans say this is vw levying extra charges. Any idea?
Discussed previously if you search
2 Likes
In another thread, a car buyer said VW / Audi was off the table. So you might out of luck doing a direct sell.