[Schweitzer]

Can anyone help me with this?

I'm selling my car, which is under lease, to a potential buyer here in California. The lease purchase quote includes sales tax, but it's a nominal, $12.00. The title would be issued directly in the name of the purchaser, not me, upon payment to the leasing company.

Question: When the buyer goes to register the car with the CA Dept of Motor Vehicles, will he have to pay 10% sales tax on the purchase price of the car?

If so, then that would dramatically affect the price at which I can sell my car. (I'm asking 35K, but if the buyer has to pony up $3,500 in taxes on top of that, my price might not be so great. I know some private sellers agree to lie about the sales price to avoid taxes, but that's something I wouldn't want to do anyway.)

If you're knowledgeable about this, I would be grateful for any advice.

[JSpira]

Presuming the laws are anything like New York's, the answer is yes. The buyer has to pay whatever the prevailing sales tax is.

You are lucky that you are only paying $12.

In NY, if someone were to buy a leased car and resell it, the seller would have to pay sales tax FIRST on the acquisition price and then the buyer would have to pay sales tax on the sale price.

[Schweitzer]

Since I'm not the one buying it -- the buyer is -- there is a form provided by the leasing company that I sign authorizing the Payor to buy the car in their name, and the certificate of ownership is surrendered directly to the buyer.

[JSpira]

Originally Posted by Schweitzer

Since I'm not the one buying it -- the buyer is -- there is a form provided by the leasing company that I sign authorizing the Payor to buy the car in their name, and the certificate of ownership is surrendered directly to the buyer.

Ah. Just to clarify, I was thinking of a lease end buyout. BMW FS won't allow anyone but the dealer or the leasee to buy the car at the agreed upon price at the end of the lease. As a result, if I were leasing and wanted to sell you the car at lease end, I would have to buy it first.

[Schweitzer]

I went through Chase, which allows someone else to purchase the car.
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I just spoke with my BMW dealer, who confirmed that the buyer will have to pay CA sales tax on the full purchase price; so I have to lower my price to account for that.

[JSpira]

Originally Posted by Schweitzer

I went through Chase, which allows someone else to purchase the car.
---
I just spoke with my BMW dealer, who confirmed that the buyer will have to pay CA sales tax on the full purchase price; so I have to lower my price to account for that.

Before you lower the price, wouldn't a buyer have to pay sales tax on ANY car?

[Schweitzer]

True, but lots of buyers look to purchase from a private seller who's willing to lie to the DMV about the sales price to evade taxes.

[Hankdoll]

Originally Posted by Schweitzer

True, but lots of buyers look to purchase from a private seller who's willing to lie to the DMV about the sales price to evade taxes.

The DMV has really cracked down on this type of fraud. When it comes to a 2006 model, you can't lie much. Maybe a thousand or two...which only saves the new buyer $100 or so in tax...not worth losing a deal over. Lower the sales price $100 bucks then if you really want to be more competative with the less scrupulous.

[Schweitzer]

"When it comes to a 2006 model, you can't lie much."

Yeah, wouldn't to lie...nor would Chase, who will issue a bill of sale on the true price. In any case, I'm looking at probably having to accept somewhere in the neighborhood of $33,200 for my car.