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My 2018 M550 was due to come off lease on June 30, but I extended until August 30 while I wait for my new 2021, which should be here by mid-August.

BMWFS is offering a $7500 customer purchase discount, and a friend is interesting in buying it at that price. Is there a way for him to buy it directly from BMWFS so that it transfers to him? Or would I need to buy it first and then sell it to him, in which case he would have to pay tax on both transactions?

The final payment is July 30. Can this be done as a lease transfer in mid August if there are no payments due so that he assumes it and then can buy it?

I also have 7 MSDs on the lease which I need to get back.
 

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Your best bet is to contact a BMW dealer and see if they can help you with that. I have no idea if that can be done directly with BMW FS but I doubt it (with *that* being having someone other than the people on the lease buy out the lease, for the discounted price).
 

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If you download the pdf for the lease buyout, you will see that the offer can only be exercised by the current lessee.
 

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Contact a sales manager at your local BMW dealer.

Print out the offer from BMWFS and email a copy to the sales manager with an explanation of the transaction you hope to do -- selling your leased car to a third party.

Ask the sales manager to get the dynamic pricing quote from BMWFS (that's the slightly discounted price BMWFS will sell your BMW to the dealer for.)

IF, and it's a big if, the dealer can ground your lease, buy your car at a good dynamic price, and then resell it to your neighbor as an arms length third party transaction, and, even with the dealer making a few bucks it's still a good deal for the third party, then it can be done.

All in the numbers, and requires everyone to agree to do the dance together.
 

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BTW, if the new car you have coming is a BMW, one would think your dealer might be more interested in facilitating the transaction as outlined above.

But, again, it depends on the numbers and all parties working together.
 

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In California there is an EXPLICIT carve out in the tax rules that allow a leasee to buy the car, then sell it within x weeks with NO tax liabilities. Many people dont realize this,

Check your state.
 

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In California there is an EXPLICIT carve out in the tax rules that allow a leasee to buy the car, then sell it within x weeks with NO tax liabilities. Many people dont realize this,

Check your state.
I've never heard of this carve out... got any link to DMV for this?

BMWFS will surely insist on collecting sales tax no matter what you want to do with the car within x weeks so how do you get that money back from the DMV? And let say the title takes a month to get mailed, how do you sell the car to the next person without a title?
 

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You could buy it, and then sell it to your friend. In Floriduh, the sales tax liability only occurs when you register a car, not when you buy it. Floriduh titles have multiple lines on them for selling and reselling a car using that one tittle.

I bought my first BMW in Virginia. They gave me a Virginia temporary tag and a "manfuacturer's certificate of origin." The certificate looked like a title, but it was issue by BMW, not Virginia. Near when the temporary tags expired, I took the bill of sale, the certificate of origin, and my registration for my old car (which I sold to a friend in Virginia), and went down to the tax collector's office. I had to pay the Floriduh 6% sales tax and a country tax of $25, and pay to transfer the registration from the old car.
 

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I've never heard of this carve out... got any link to DMV for this?

BMWFS will surely insist on collecting sales tax no matter what you want to do with the car within x weeks so how do you get that money back from the DMV? And let say the title takes a month to get mailed, how do you sell the car to the next person without a title?
It isnt a 'sales' tax. Technically it isnt due 'upon sale'.

This has come up before, I may chase this down a bit.... BMW will definitely WANT to collect it.


6277. Presumption on sale to lessee. There shall be a presumption that a transfer of a vehicle to a lessee by a lessor, as defined in Section 372 of the Vehicle Code, was a sale for resale if the lessee transfers title and registration 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. The presumption may be rebutted by evidence that the sale was not for resale prior to use.
Sectio. 6277 Of the Revenue and taxation code

If you note, it is 10 days from after one acquires the title.

How to get BMW from talking the money... how to get it back from DMV...dunno. Ive never leased... ;)
 

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So in practice, this is impossible to execute... :(

There is no way BMWFS will agree to sending the buyout papers without use tax. So you will have to pay the use tax upfront and try to get it back from DMV. But since this is an actual tax, DMV is not likely to be able to refund it (they can only refund fees). So I believe the only way to get that money back after you flip the car within 10 days is to claim it on your State tax return (which can be months or even a year from the time the State takes your money) and wait for Franchise Tax Board to send it back to you. There is probably a provision in the State tax return form for excess use tax paid but I'm sure it is complicated as hell.
 

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So in practice, this is impossible to execute... :(

There is no way BMWFS will agree to sending the buyout papers without use tax. So you will have to pay the use tax upfront and try to get it back from DMV. But since this is an actual tax, DMV is not likely to be able to refund it (they can only refund fees). So I believe the only way to get that money back after you flip the car within 10 days is to claim it on your State tax return (which can be months or even a year from the time the State takes your money) and wait for Franchise Tax Board to send it back to you. There is probably a provision in the State tax return form for excess use tax paid but I'm sure it is complicated as hell.
...

Ive made a career of saying ***8220;wait, why not??***8221;. Others kinda just go with the prevailing wisdom.


If I can find a hack, I***8217;ll report back....
 

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I've never heard of this carve out... got any link to DMV for this?

BMWFS will surely insist on collecting sales tax no matter what you want to do with the car within x weeks so how do you get that money back from the DMV? And let say the title takes a month to get mailed, how do you sell the car to the next person without a title?
In CA, Pub34 outlines the steps to execute this time of sale for resale without triggering sales tax on first transaction.

"Transfer of a vehicle to a lessee by a lessor—as a sale for resale

The sale of a vehicle to a lessee by a lessor may be considered a nontaxable sale for resale. If the lessee transfers title and registration to a third party within 10 days from the date the lessee acquires title from the lessor at the expiration or termination of a lease, the sale will be presumed to be a sale for resale. Transfer of title and registration occurs when the lessee endorses the certificate of ownership.As the lessor, or seller, you may accept a resale certificate from a purchaser who intends to resell the vehicle. Assuming that the purchaser is not engaged in the business of selling vehicles, as defined in Regulation 1595, Occasional Sales—Sale of a Business—Business Reorganization, the purchaser must include on the resale certificate a specific description of the vehicle, including the serial number (vehicle’s identification number (VIN)). For more information on resale certificates, refer to Regulation 1668, Sales for Resale, and Regulation 1610, Vehicles, Vessels, and Aircraft....

If such a resale certificate is issued timely by the purchaser and taken in good faith by the lessor, or seller, it is considered a valid resale certificate and the certificate relieves the lessor, or seller, from liability for the sales tax and the duty of collecting the use tax."


https://www.cdtfa.ca.gov/formspubs/pub34.pdf
 

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The keyword there is may accept... meaning it is at the discretion of the leasor because CA law also requires dealer (in this case BMWFS) to collect and withhold sales tax if the transaction is dealer facilitated.

So it's not a question of law but question of liability. Will BMWFS agree to draft a lease end buy agreement without sales tax? Does BMWFS' policy allow such thing? My guess is no, even you promise really nicely that you are selling it within 10 days. If someone without a dealer license bought a car off lease from BMWFS and didn't pay sales tax, I'd love to hear about it.

BTW, this is an interesting but somewhat archaic discussion... I'm not trying to argue a counter point just for the sake of arguing. I'm actually interested to know if this is possible. I also don't want to derail the thread :) If I still have an open contract with BMWFS, I may be tempted to call them and find out if they will accept my "certificate of resale", which I assume will be a written statement that I intend to resale vehicle with this VIN within 10 days.
 

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BTW, this is an interesting but somewhat archaic discussion... I'm not trying to argue a counter point just for the sake of arguing. I'm actually interested to know if this is possible. I also don't want to derail the thread :) If I still have an open contract with BMWFS, I may be tempted to call them and find out if they will accept my "certificate of resale", which I assume will be a written statement that I intend to resale vehicle with this VIN within 10 days.
Let's say BMWFS does not play along, then CA does have a claim form, CDTFA-101-DMV, to request refund of overpaid sales tax from DMV:

https://cdtfa.ca.gov/formspubs/cdtfa101dmv.pdf
 

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Interesting discussion, Left Coasters. Don't forget, OP hails from New Jersey.

FWIW, I remain enamored with my suggestion -- contact a dealer, have the dealer get the dynamic price, compare the dynamic price to the BMWFS buyout offer price, and, with luck, the dealer can get in the middle of it and OP walks away, or rather drives off in a new car, and the neighbor gets a reasonably good deal on OP's lease turn-in.

Keeps the thing at arm's length for OP, which has advantages that might be worth it.

I was also wondering, if the lease is assumed prior to lease-end, will the person assuming the lease be eligible for lease-end discounted buyout pricing as original leasees are?
 

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Interesting discussion, Left Coasters. Don't forget, OP hails from New Jersey.

FWIW, I remain enamored with my suggestion -- contact a dealer, have the dealer get the dynamic price, compare the dynamic price to the BMWFS buyout offer price, and, with luck, the dealer can get in the middle of it and OP walks away, or rather drives off in a new car, and the neighbor gets a reasonably good deal on OP's lease turn-in.

Keeps the thing at arm's length for OP, which has advantages that might be worth it.

I was also wondering, if the lease is assumed prior to lease-end, will the person assuming the lease be eligible for lease-end discounted buyout pricing as original leasees are?
NJ has similar resale certificate, form ST-3, and similar sales tax refund form.

https://startingyourbusiness.com/new-jersey-resale-certificate/
https://nj.gov/mvc/pdf/about/Refund_Application.pdf

As far as lease assumption, if the lease buyout discount follows the VIN, then the new lessee should be eligible.
 

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Discussion Starter #17
Thanks for all the suggestions. I am going to try and work it out through the dealer and see what happens.
 

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In CA, Pub34 outlines the steps to execute this time of sale for resale without triggering sales tax on first transaction.

"Transfer of a vehicle to a lessee by a lessor—as a sale for resale

The sale of a vehicle to a lessee by a lessor may be considered a nontaxable sale for resale. If the lessee transfers title and registration to a third party within 10 days from the date the lessee acquires title from the lessor at the expiration or termination of a lease, the sale will be presumed to be a sale for resale. Transfer of title and registration occurs when the lessee endorses the certificate of ownership.As the lessor, or seller, you may accept a resale certificate from a purchaser who intends to resell the vehicle. Assuming that the purchaser is not engaged in the business of selling vehicles, as defined in Regulation 1595, Occasional Sales—Sale of a Business—Business Reorganization, the purchaser must include on the resale certificate a specific description of the vehicle, including the serial number (vehicle’s identification number (VIN)). For more information on resale certificates, refer to Regulation 1668, Sales for Resale, and Regulation 1610, Vehicles, Vessels, and Aircraft....

If such a resale certificate is issued timely by the purchaser and taken in good faith by the lessor, or seller, it is considered a valid resale certificate and the certificate relieves the lessor, or seller, from liability for the sales tax and the duty of collecting the use tax."


https://www.cdtfa.ca.gov/formspubs/pub34.pdf
Nice find

The keyword there is may accept... meaning it is at the discretion of the leasor because CA law also requires dealer (in this case BMWFS) to collect and withhold sales tax if the transaction is dealer facilitated.

So it's not a question of law but question of liability. Will BMWFS agree to draft a lease end buy agreement without sales tax? Does BMWFS' policy allow such thing? My guess is no, even you promise really nicely that you are selling it within 10 days. If someone without a dealer license bought a car off lease from BMWFS and didn't pay sales tax, I'd love to hear about it.

BTW, this is an interesting but somewhat archaic discussion... I'm not trying to argue a counter point just for the sake of arguing. I'm actually interested to know if this is possible. I also don't want to derail the thread :) If I still have an open contract with BMWFS, I may be tempted to call them and find out if they will accept my "certificate of resale", which I assume will be a written statement that I intend to resale vehicle with this VIN within 10 days.
I can 100000% guarantee that over the phone the answer will be no. Create a document trail thats shows they are withholding a tax that may not be due and the story may change.

The problem is that one needs 'standing' to push this matter. Most dont. Plus, the days of a lease return being a good buy are long gone. (With the exception of a rare covid credit..)
 

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Nice find



I can 100000% guarantee that over the phone the answer will be no. Create a document trail thats shows they are withholding a tax that may not be due and the story may change.

The problem is that one needs 'standing' to push this matter. Most dont. Plus, the days of a lease return being a good buy are long gone. (With the exception of a rare covid credit..)
CA also has use tax clearance form for sale of resale upon lease buyout(or family transfer) from DMV use tax collection. This looks like a formal document issued by state of CA that BMWFS may accept.

Nonetheless, the best option probably is a dealer that is willing to execute 3rd party buyout(at a fee), as the dealer can guarantee lessee does not make ".... a taxable use of the vehicle prior to the time that the vehicle was resold to the third party", within 10 days in CA.

https://www.cdtfa.ca.gov/taxes-and-fees/exemptions-exclusions-faq.htm
 

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Nonetheless, the best option probably is a dealer that is willing to execute 3rd party buyout(at a fee), as the dealer can guarantee lessee does not make ".... a taxable use of the vehicle prior to the time that the vehicle was resold to the third party", within 10 days in CA.

https://www.cdtfa.ca.gov/taxes-and-fees/exemptions-exclusions-faq.htm
Yeah, agree.

Also we know BMWFS will give a better (cheaper) buyout price if the end buyer is NOT the leasee.

SO setting up a dealer where the dealer gets a quote IN THE NAME OF THAT FINAL BUYER may be the very best solution. (unless there is something very odd going on with the lease end purchase price.)
 
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