Hey guys,

I am considering purchasing an e60 which the seller is currently leasing. The car is titled in the state of California.

According to the lease finance company, since the owner is in California, they do not collect sales tax on behalf of the state of California and will release the vehicle title once they receive their full payoff amount in certified funds.

My concern is the sales tax that might be owed to California. Does the seller owe the state of California sales tax when the owner pays off the lease and takes legal ownership of the title, but immediately sells the car to me, an out of state buyer who will register the car in Nevada not California? Will I have trouble getting the title transferred from California to Nevada in this situation?

Should I be concerned or just paranoid? Please help because I am prepared to purchase this car this week, but don't want any surprises that the Nevada DMV cannot issue me clear title because California wants some sort of tax money before transferring the title to Nevada.

Thanks for your help guys!

 

From what I understand(this could have changed or there may be a loophole) due to my own personal experience in Colorado, the seller will be on the hook for sales tax if he buys the car out of the lease, whether it is you paying it off or not. One option may be to transfer lease to you first so that you can then pay it off to save the original lessee from having to pay sales tax. You may be able to run it through a dealer for a small fee to avoid this as well.

 

hit your dealer up about this.
any local bmw dealer or talk to any california bmw dealer.

I was just told that they can transfer leases all day long or do sales on leases through the dealer so it's free and clear from the original lessee's name?

but as for fee's, you should ask them instead.

 

The guy who own's the car has a few days to sell it again in order to avoid the tax. The new buyer is then responsible for the tax. You should pay the tax in your state when you register it. It's a lot cleaner if the present owner has the funds to pay for the car from the lease company, and then sign's the title over to you. I've done this myself.

 

We just purchased our A4, when the lease expired. The Use tax, as it is called, is collected at the time the certificate of title is brought into DMV to have the vehicle ownership changed.

It would probably be cleaner to have the lease transferred to you.

 

Many lease companies don't alow a total transfer of the least to another party. The original person is still on the lease. It's cleaner if he just buys the car and then signs the title to you after you pay him.

 

That's true. BMWFS is, however, one of the easier lessors to work with. IIRC, the major restriction on lease transfer is if the transfer is occurring too close to the lease termination date, but I may be mistaken.

 

I'm a Lexus dealer in California and here is how it works. When the current lessee calls for a payoff, the lessor quotes him a payoff including the sales tax. If you agreed to pay the current owner the payoff amount, you have just agreed to pay his sales tax. The best way to do it is to have a local dealer(wherever the seller lives) payoff the vehicle and take it into their inventory. The dealers payoff does not include sales tax. If it's a BMW dealer, they can even negotiate a lower payoff with BMW financial beacuse BMW has a full circle program with their dealers. You then purchase the vehicle from the dealer and ask for a one way trip permit so that you can pay the sales tax and regsitration in your own state. Of course you would have to come to some kind of fee arrangement with the dealer. Most dealers would be happy to do it.

 

OR... tell the seller you will buy it for the payoff minus his sales tax, telling him you don't want to pay taxes "twice"... fully understandable. That way, it makes it his responsibility to either pay it or make arrangements so that he doesn't have to pay.

 

According to payoff statement from BMW,the Net Payoff figure is simply total lease payoff amount. There is no Sales/Use Tax added to the Net Payoff. It also states that Sales tax, Registration and Titling Fees, unless listed above, are your responsibility.

When a car is leased, is the title registered in the name of the lessee (guy selling car to me) or does the leasing company show up as the registered owner on the title as well? Obviously, the leasing company is the lienholder.

This is probably a silly question, but when a car is leased, is there a vehicle title issued by the DMV?

I planned to execute a bill of sale with the seller and then mail off a cashiers check to the leasing company to payoff the lease, which upon receipt of full payment, BMW Financial will endorse (release) the title and then forward it to the seller to sign over to me. Assuming the seller is the only name that appears on the title, there should be no problems in him endorsing the title over to me correct?

I would then take the title and register the in Nevada. As mentioned earlier, in the state of Nevada, I do not have to pay sales tax when purchasing a car from a private individual.

Does all this sound correct?

Thanks for all your help

 

That sound's good, BUT you're trusting the seller to sign the title over to you. That's why it's cleaner if he pays for it himself, and then you pay him when he signs the back of the title over to you.

The leasing company will change the title to the guy leasing the car. There is some risk here, unless you trust the person you're buying the car from.

 

I have identified an out-of-state buyer from Washington for my car
which is currently leased in CA. He is traveling to CA to purchase the car
by paying the pay-off amount to the dealer in cash and wants to drive
the car off the lot upon making the payment. However, the dealer says
it will take 3 days or so to release the title. It will be released to
me and then I will fed-ex it directly to him in WA. Can I complete a
bill of sale and give it to him before I receive the title? How can I
protect from liability if he drives the car until I transfer the title? By the way, the dealership (VW) is not willing to help in any way as far as I can tell (e.g., by releasing the title directly to the 3rd party). Any ideas? Thanks!