Is this sketchy? Lease Buyout
02-26-2019, 07:56 PM
#1
Is this sketchy? Lease Buyout
Been searching for some 991.2's and found one in LA, private seller. I live in Vegas and if you buy private you don't have to pay the sales tax which is a huge plus. However this guy selling his 991.2 has it currently leased and wants me to pay him so he can then pay FPS and then hand over the title. According to him this still counts as private sale however this whole thing sounds somewhat ridiculous and I've never really come across this before so if anyone has any input it would be greatly appreciated.
02-26-2019, 08:42 PM
#3
Rennlist Member
This should be no different than buying a Porsche with a loan through Porsche Financial Services.
I bought a car years ago and the car had a loan on it through Porsche. I paid more for the car than he owed.
So, there were two checks.
One to Porsche directly, and the second to the owner for his equity.
The seller mailed my check (that was payable to Porsche directly) to Porsche with payoff instructions. He then received the title and mailed it to me once Porsche released the title.
When you buy a car with a loan, and a leased car essentially only has a loan on it, there is a little bit of trust needed. There is no way for him to get the title without paying off the car.
Oh, your bill of sale then comes directly from him which makes it a private party transaction - that's what I did and there is a huge tax difference when buying private party in Illinois.
Worked out just fine.
Porsche did not care where the funds came from for the payoff.
I bought a car years ago and the car had a loan on it through Porsche. I paid more for the car than he owed.
So, there were two checks.
One to Porsche directly, and the second to the owner for his equity.
The seller mailed my check (that was payable to Porsche directly) to Porsche with payoff instructions. He then received the title and mailed it to me once Porsche released the title.
When you buy a car with a loan, and a leased car essentially only has a loan on it, there is a little bit of trust needed. There is no way for him to get the title without paying off the car.
Oh, your bill of sale then comes directly from him which makes it a private party transaction - that's what I did and there is a huge tax difference when buying private party in Illinois.
Worked out just fine.
Porsche did not care where the funds came from for the payoff.
02-26-2019, 08:51 PM
#4
Rennlist Member
Nothing wrong with that. As desribed above.
02-26-2019, 08:53 PM
#5
Instructor
He has a fixed buy out price, naturally, plus disposition fee. I don't see a way to avoid sales tax, however, because if he buys it out he'll be required to pay tax, then will have to pass it on to break even.
You could negotiate that you pay half of the tax and he pay half, but he is responsible for disposition fee. If he finds that agreeable arrange to purchase from him private party after he buys it out of the lease.
You could negotiate that you pay half of the tax and he pay half, but he is responsible for disposition fee. If he finds that agreeable arrange to purchase from him private party after he buys it out of the lease.
02-26-2019, 09:00 PM
#6
Rennlist Member
He has a fixed buy out price, naturally, plus disposition fee. I don't see a way to avoid sales tax, however, because if he buys it out he'll be required to pay tax, then will have to pass it on to break even.
You could negotiate that you pay half of the tax and he pay half, but he is responsible for disposition fee. If he finds that agreeable arrange to purchase from him private party after he buys it out of the lease.
You could negotiate that you pay half of the tax and he pay half, but he is responsible for disposition fee. If he finds that agreeable arrange to purchase from him private party after he buys it out of the lease.
It depends on whether or not Porsche will collect the tax - OR, just take the payoff and send him the title. At which point, if he were truly buying out the car for himself, he would need to take the title to the DMV and at then, pay tax.
If he gets the title and Porsche does not collect the tax, then, he can sign it over to the new owner and never pay tax on the transaction.
It really depends on whether or not Porsche is going to collect the taxes directly.
Not sure how that works because when I bought mine, the car was financed as a purchase so the owner already had paid tax.
02-26-2019, 09:08 PM
#7
Instructor
It depends on whether or not Porsche will collect the tax - OR, just take the payoff and send him the title. At which point, if he were truly buying out the car for himself, he would need to take the title to the DMV and at then, pay tax.
If he gets the title and Porsche does not collect the tax, then, he can sign it over to the new owner and never pay tax on the transaction.
It really depends on whether or not Porsche is going to collect the taxes directly.
Not sure how that works because when I bought mine, the car was financed as a purchase so the owner already had paid tax.
If he gets the title and Porsche does not collect the tax, then, he can sign it over to the new owner and never pay tax on the transaction.
It really depends on whether or not Porsche is going to collect the taxes directly.
Not sure how that works because when I bought mine, the car was financed as a purchase so the owner already had paid tax.
The title is currently in Porsche Financial Service's name; whether it be titled in the name of the current lesee upon buyout, or of the OP, I feel it will be viewed by the DMV as a non-private party transaction and will incur sales tax upon registration.
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02-26-2019, 09:10 PM
#8
Thanks for the input guys. Yea Nevada law on this is kind of weird. When I take it back to register here you don't pay sales tax if you prove that it was a private party sale. But California can be a bit of a mess I guess. And cherry on top I'm gonna finance some of it through my credit union. Idk this may seem like more trouble than it's worth.
02-26-2019, 09:33 PM
#9
Rennlist Member
Thanks for the input guys. Yea Nevada law on this is kind of weird. When I take it back to register here you don't pay sales tax if you prove that it was a private party sale. But California can be a bit of a mess I guess. And cherry on top I'm gonna finance some of it through my credit union. Idk this may seem like more trouble than it's worth.
This is a simple question - the owner needs to call Porsche Financial to find out if they collect tax on the purchase.
If not, they owner needs to find out how they get the actual title.
If it is a paper title that Porsche holds, it will likely be sent to the owner by Porsche with a lien release letter attached.
If it is an electronic title or the guy needs to go to the DMV, you're probably out of luck.
If it is everything you want, it's worth the hassle to figure it out - if it is not the perfect car, skip it.
02-26-2019, 10:08 PM
#11
Nah it's just a base 2017 991.2 it did check all of the boxes, rs wheels, sport exhaust and sport chrono but certainly not a unicorn. Which is why I think it might be more trouble than it's worth. I really appreciate all the input guys. New to the forums but this place is great.
02-26-2019, 10:25 PM
#12
You could just assume the lease near the end of the term and exercise the buyout yourself. BMW is good about lease transfers, I don't know about Porsche. Benefit is that if you hold the lease then the buyout is clearly on you so no other owner involved.
02-26-2019, 10:38 PM
#13
Yea but if I do the buyout myself I would be on the hook for the taxes which was kind of the point of going private party all together. If our sales tax wasn't so high I wouldn't mind doing the dealership route but sales tax in Vegas is 8.25% which I think is the highest in the country.
02-26-2019, 10:54 PM
#15
Rennlist Member
I’ve only scanned this thread and apologize if this was already addressed. In most situations, leasing companies will not sell to a third party therefore, if a lessee wants to sell their leased vehicle, they first must purchase it from the lessor before they can sell it to a potential buyer. Tax would be paid by the lessee based on the “buy out” figure and tax would then need to be paid by private party purchasing vehicle from oringal lessee. I’m not aware of any state offering a legitimate sales tax exemption on private party sale in fact, many states will charge tax based on either the sales price or book value of vehicle, whichever is greater.