My situation:

1. leased s2k (nearing lease end- 3yr)
2. balance to buy car is $2x,xxx

Who pays the tax on the vehicle on the $2x,xxx amount if i sell to a private party?

If i wish to sell to a private party, do i sell it for the balance and then DMV charges the buyer with the tax? OR do i have to include the tax to the selling price, hence the buyer does not pay a tax to the DMV?

I only ask because i see a lot of threads where used car buyers are told to declare lower values to the DMV to pay a lower tax. i know many of you have sold your cars on here and know the answer, but i feel if both i pay the initial tax then the buyer pays another tax there is one unecessary payment, then would be better if i rolled my lease onto them then let them buy the car.

i have not yet called honda financial about this as i don't have to time to be put on hold. sorry for the stupid question, but i have never sold a car before.

thanks all.

 

The buyer.

 

hmmm.

i guess to simplifiy it i have 2 options, and someone correct me if there is another option i am overlooking.

1. buy my own car at the balance plus taxes, then sell it. i'd have to increase the sell price then to cover the extra tax cost. then the buyer would have to pay the tax once more again. taxes suck!

2. roll the lease over to someone and then have them buy it. but this is a much harder deal to negotiate with a private party as it seems to be a hassle.

is there any other way?

 

There is no honest way to avoid the taxes. If you buy ,you pay, if sometone else buys they pay.
The only way to mitigate your taxes would be if you had something to trade i.e- another car or anything else of value that the dealer would be willing to accept.

 

Um....I wonder how the government pay for those billion dollar jet fighters and missiles?

 

Given your situation, in order for you to become the owner of the car that you are currently leasing, you must pay the tax on the buyout amount. If you're trying to sell your leased S2k to someone else, you'll have to execute the buyout (aka, you're going to have to purchase the car and pay the tax, then transfer it to someone else).

This is why leasing is not always the best option. You get double taxed, and you have no equity on the car at the end of the lease term. It's great for a lower payment and a possible tax write-off but otherwise it's not that great of an arrangement.

MY mentality when it comes to leases are, if the car's residual value is at least 60-75% at the end of a typical lease term (3-4 years), then you the car should be purchased not leased.

Leases are perfect for cars that rapidly decline in value (ie most domestic manufacturers, not a flame on any domestics is just financial.)

You're best bet is to turn in your car at the end of the term and start over, this time buy the car, don't lease it.

BTW, trust me, the sales tax that you pay does not go toward missles and jet fighters. Sales tax is a state governed and mandated not federal. Most of your sales tax dollars are going to the school districts and local municipalities for things like road maintenance, libraries, etc.

 

i bought my used S2000 from my friend, at the end of his closed-end lease. he was offered the option of buying the car at that point for 21 and change. when he turned it in, i went with him to the dealer and said i wanted to buy it as-is. signed the paperwork, put 5 grand down, and drove away in my new car. the downside was the dealer charged a $500. surcharge, which the chick at the dealer said "everybody pays, even us when we want to buy a car" i liked it cuz i got a nice car for 4 grand less than if i went to the dealer. and my friend bought me two new S-o2's to boot. then went out and bought a hummer. go figure.

 

^^yeah, thats what i figured. thanks for the response.

i only have a few months left. feb 07 the lease ends, i just wanted to get something this year and apply it to my deductions if i could have. it looks like i will just turn the car in at lease end and decide what to do from there.

 

Sales tax on a car isn't deductible anymore. That was a 2 year deal that ended with 2005.

 

First of all, if your S2k is "leased", you don't own the car.
You cannot "sell" something you don't own.

At this point, you can either let someone else assume your lease (if your lease contract allows it), or you can buy the car from the lease holder and then sell it to your buyer.

Second, for the tax question: Think about it this way, when you go to buy a loaf of bread, who pays the sales tax on the bread, you the buyer or the grocery store owner? Once you figure that out, you can apply the same principle to selling a car that you own. Good luck.