[krnnerdboy]

Hello,
I have a dilemma. I'm currently In a lease that I'm trying to sell. The current sell price is 30k but the payoff is 37k. But do to the damages on the car it's worth well below the current owed amount.

When I sell the vehicle from my lease the buying party will obviously pay the 30k in taxes but do I need to pay the difference on the 7k in taxes?

[jlstyle]

Little confusing to read but if your payoff is $37k and buyer is coming up with $30k, you give him $7k to make up the difference. There is no separate tax you need to pay.
Payoff is a payoff.
But what I don't get is, why are you selling a leased car that is upside down in value?
I don't know how many month is left and your monthly payment is, but it doesn't seem like a good idea to take a hit for more than $7k on leased car to sell...By looking at your payoff, it looks like you are reaching the end of lease contract anyways.

[krnnerdboy]

Originally Posted by jlstyle

Little confusing to read but if your payoff is $37k and buyer is coming up with $30k, you give him $7k to make up the difference. There is no separate tax you need to pay.
Payoff is a payoff.
But what I don't get is, why are you selling a leased car that is upside down in value?
I don't know how many month is left and your monthly payment is, but it doesn't seem like a good idea to take a hit for more than $7k on leased car to sell...By looking at your payoff, it looks like you are reaching the end of lease contract anyways.

Thanks for the reply...and you understood my jibberish😃

But my logic tells me I would have to pay the taxes on the remaining 7k that no one has paid taxes for. Maybe I'm over thinking it. But I've encountered quite a few cash buyers that want a "tax incentive". And I definitely don't want to be paying their taxes after the deal is said and done.

[new2the3]

I'm not sure what the CA laws are but in FL where I am from you pay sales tax on the entire car e.g. your purchase price, not just the leased payments. If the sale price to the 2nd buyer is 30k then he would pay sales tax, if any, on the 30k. You would owe your lender the difference between the sales price of 30k and your buyout of 37k = 7k. Seems like a bad move.

[khaye1]

-You owe the bank a pay off of $37K
-Buyer is willing to give you $30K
-difference of $7k that will have to be paid by you...to the buyer.
-with CA taxes and licensing you're looking at another 10%
-for a grand total of $40,283 roughly.

You have to understand that when you leased, you financed only part of the car...roughly $20K. You paid taxes on only that $20K.

[bbbbmw]

Why not just give it back to the bank, with $7k in cash? Then no taxes would be owed.

[Hoa]

You can make a payment of 7K to BMW Financial and then the buyer can purchase the vehicle at 30K since thats how much is still owed on the vehicle.

Would 7K cover all the remaining payments on the vehicle? If it does, just keep the car until lease end. You would be throwing money away. If it somehow doesn't and you want out of a lease then 7K payment to BMW it is. Hope that helps

[krnnerdboy]

Thank you very much guys! I just needed some peer reassurance and I just spoke to my finance manager regarding it and confirmed everyone's opinion.

Just to clear it up, im not losing 7k, the buyer just wanted some "incentive" for paying cash

[Repoman]

Give no incentives. If they want to buy the car, then they will.