Will I have to pay sales tax? See Thread for more info

100smilesagallon · 11-29-2016, 01:27 PM

My friend is listing his leased vehicle for sale privately. My understanding is that for him to move forward with the private party sale, he will first have to purchase the vehicle from the manufacturer. So

1) Is the assumption above correct?

and more importantly

2) Will he have to pay sales tax since he is "flipping" the vehicle? Or are there any tax exemptions or laws in VA that will save him $$?

Appreciate everyone's input!

bb1857 · 11-30-2016, 06:17 AM

Not sure about the tax laws in VA but to answer question 1 - he does not have to buy out the lease before selling it. His lease has a payoff just like a traditional loan so once he finds his buyer and they agree to a number, the buyer or his finance company would likely cut a check to BMW FS for the amount agreed to if the amount is less than the payoff. Then your friend would cut another check to make up the difference. If the amount agreed to is more than the payoff the buyer would cut a check for the payoff to BMW FS then cut your friend another check for the extra to make up the full sale amount.

Most banks will not cut a check directly to a seller when there is a payoff involved because it protects them from shady sellers, or possible title loans that might be on a vehicle.

Perhaps someone living in VA can comment on the tax piece because in MD you are taxed on the entire amount of the vehicle upfront in a lease so if you sell you don't pay tax again.

SpeedandTechM · 12-01-2016, 10:41 PM

as far as i know he has to pay taxes unless he has a dealer license.
A friend was in the same situation and had to buy it and resell it. As the lease is under original owner. That is what i know, I could be very well be wrong.

Regards,
Raja

MrSmileyDC · 12-02-2016, 04:36 PM

I believe this comes down to whether or not you can prove you already paid the sales tax or not.

https://www.dmv.virginia.gov/vehicles/#leased.asp

SpeedandTechM · 12-04-2016, 08:26 PM

Quote:

Originally Posted by BimmerGuyDC

I believe this comes down to whether or not you can prove you already paid the sales tax or not.

https://www.dmv.virginia.gov/vehicles/#leased.asp

that's interesting. I got to keep this in mind.

11-29-2016, 01:27 PM	#1
100smilesagallon Private First Class 27 Rep 111 Posts Drives: X3MC Join Date: Apr 2008 Location: DC Metro iTrader: (0)	Will I have to pay sales tax? See Thread for more info My friend is listing his leased vehicle for sale privately. My understanding is that for him to move forward with the private party sale, he will first have to purchase the vehicle from the manufacturer. So 1) Is the assumption above correct? and more importantly 2) Will he have to pay sales tax since he is "flipping" the vehicle? Or are there any tax exemptions or laws in VA that will save him $$? Appreciate everyone's input!
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11-30-2016, 06:17 AM	#2
bb1857 Major 868 Rep 1,413 Posts Drives: 2020 X3MC Join Date: Jan 2016 Location: Sykesville, MD iTrader: (1) Garage List 2007 BMW 335 E92 [0.00] 2015 BMW 428GC [0.00] 2014 BMW 535i [0.00]	Not sure about the tax laws in VA but to answer question 1 - he does not have to buy out the lease before selling it. His lease has a payoff just like a traditional loan so once he finds his buyer and they agree to a number, the buyer or his finance company would likely cut a check to BMW FS for the amount agreed to if the amount is less than the payoff. Then your friend would cut another check to make up the difference. If the amount agreed to is more than the payoff the buyer would cut a check for the payoff to BMW FS then cut your friend another check for the extra to make up the full sale amount. Most banks will not cut a check directly to a seller when there is a payoff involved because it protects them from shady sellers, or possible title loans that might be on a vehicle. Perhaps someone living in VA can comment on the tax piece because in MD you are taxed on the entire amount of the vehicle upfront in a lease so if you sell you don't pay tax again. Last edited by bb1857; 11-30-2016 at 09:05 AM..
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12-01-2016, 10:41 PM	#3
SpeedandTechM Banned 49 Rep 119 Posts Drives: e36 M3s, e46 M3 Join Date: Apr 2016 Location: VA/DC/MD iTrader: (0)	as far as i know he has to pay taxes unless he has a dealer license. A friend was in the same situation and had to buy it and resell it. As the lease is under original owner. That is what i know, I could be very well be wrong. Regards, Raja
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12-02-2016, 04:36 PM	#4
MrSmileyDC Major 327 Rep 1,001 Posts Drives: 2016 F82 M4 Join Date: Sep 2012 Location: DC Metro iTrader: (0) Garage List 2016 BMW F82 [0.00]	I believe this comes down to whether or not you can prove you already paid the sales tax or not. https://www.dmv.virginia.gov/vehicles/#leased.asp __________________ 2007 e92 335i 6MT \| Cobb AP Stage 1+ \| ETS FMIC \| AFE Dual Cone Intake (Sold) ED 8/18 - PCD 10/19 \| 2016 F82 M4 6MT \| Alpine White \| CF Roof \| CF Trim \| Black Extended Leather \| Executive Package \| Lighting Package \| Adaptive M Suspension \| 19" 437M Black Wheels
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