[jafza412]

This is a little off topic of most things here, not sure where I should have put this. Anyway, I had a 2009 Audi A4 out on a lease, I liked the car but missed the BMW I had immediately before that. I discovered my KBB was a little higher than the buyout value so I listed it and found a buyer to pay exactly the buyout value. Awesome, off to the BMW store I went!

The guy buying it had his credit union (CU) through which he financed send a check for the amount and the title was sent to them. All was well until I got a call from the buyer and CU stating they were unable to transfer the title because there is a tax lien on it. The title was sent to the CU but had my name on it, so essentially they are saying it has transferred from Audi FS to me and needs to go from me to CU. And because of this tax is to be paid for each transaction.

What doesn't make sense to me is that tax is charged whenever money changes hands. In this case this happened only once when the CU paid Audi FS, and the tax was paid on this by the buyer. Also the CU loan advisor is a jackass, he wasn't able to answer any of these questions that we have and basically asked if one of us could pay the tax since it was "only" $1800 so we could be done with it.

Another thing, the tax on the lease was not paid in full at the time of inception, is it possible this is what the tax lien is? However, the way I see it, a lease is kind of like a rental, and as long as I have the lease out, I am paying the tax on it on a monthly basis. However, if I terminate the lease, that rental ends. And since the car was bought out, the tax on the value of the car was paid.

Analogous to a rental car, if you get a quote for renting a car from Hertz for a month, you'll get the rate plus tax. If you return it after a week, you aren't responsible for tax for the entire one month term, just for what you used it.

Sorry for the lengthy post. The buyer and I think this falls on the CU since they are the ones facilitating this transfer. Audi FS has released the car to me and I am clear of my obligation to Audi. The CU has paid for the car but the title remains in my name. I am not going to pay anymore money (unless for some reason I am obligated for paying the tax in full for my lease, which is complete bullshit because again its double tax).

Anyone ever been in a scenario like this??

[galahad05]

I can only make the comment that Texas is known as one of a few states that has very very very un-lease-friendly (read stupid) tax laws.

[galahad05]

http://www.leaseguide.com/Articles/texas-auto-lease.htm

[chromisdesigns]

Texas has many ways to butt-f*ck you, this being only one of the myriad ways.

[IancoleTX]

Originally Posted by chromisdesigns

Texas has many ways to butt-f*ck you, this being only one of the myriad ways.

Says the guy from San Francisco.

[jafza412]

Originally Posted by galahad05

http://www.leaseguide.com/Articles/texas-auto-lease.htm

Interesting information. Thanks for the link!

One major thing I failed to mention is that I started the lease when I still lived in PA. I registered the car here but the more I think about it, I never updated Audi FS about my move. But I don't know if that matters.

So now a whole new layer of complexity. I looked into speaking with a tax attorney but it seems their rates are going to be over half of what the CU thinks is owed. Shoulda been an attorney instead of an enginerd.

[galahad05]

There definitely IS a complexity to moving out-of-state with a leased car. There are sites that talk about this complexity (generally, lease-car info sites), and this is not legal or tax advice! But, if I recall correctly, depending on the State(s) you're moving to, there are taxes due at the destination. The new State has to take their cut....

[galahad05]

You know, you might want to re-post this in the Ask-a-dealer sub-forum.

[galahad05]

EDIT: Oops, wrong forum. Never mind about the ask-a-dealer....
....you might try the SouthWest regional sub-forum as well as here. Maybe someone has direct experience with a move-to-Texas-while-leasing experience.

[saeyedoc]

I don't know how it works with a lease, but I moved to TX from MT, where there's no sales tax. Updated my loan companies with new address, registered all cars in TX and never had any problems with taxes when I traded those vehicles later. Not sure why it would be a problem with a leased vehicle.
I think the issue is with the new buyer, not sure, but I think if you bought the car from the leasing company, you would be liable for the taxes since they were never paid at lease inception. If the new buyer (or his finance company in this case) bought the car directly from the leasing company, they are legally responsible.

[jafza412]

Originally Posted by galahad05

There definitely IS a complexity to moving out-of-state with a leased car. There are sites that talk about this complexity (generally, lease-car info sites), and this is not legal or tax advice! But, if I recall correctly, depending on the State(s) you're moving to, there are taxes due at the destination. The new State has to take their cut....

Makes sense. In this case then I would request a refund from PA since I was not living there and have to pay that money to TX. But no way this is $1800 worth.

Originally Posted by saeyedoc

I don't know how it works with a lease, but I moved to TX from MT, where there's no sales tax. Updated my loan companies with new address, registered all cars in TX and never had any problems with taxes when I traded those vehicles later. Not sure why it would be a problem with a leased vehicle.
I think the issue is with the new buyer, not sure, but I think if you bought the car from the leasing company, you would be liable for the taxes since they were never paid at lease inception. If the new buyer (or his finance company in this case) bought the car directly from the leasing company, they are legally responsible.

Well I paid taxes on a month to month basis. I had my total lease payment spread out of the 36 month term and each month there was a portion of tax I paid on top of that. I don't understand why on a lease I would be responsible for paying tax on something I no longer have.

[saeyedoc]

Originally Posted by jafza05

One major thing I failed to mention is that I started the lease when I still lived in PA. I registered the car here but the more I think about it, I never updated Audi FS about my move. But I don't know if that matters.
.

If you were still making payments after you moved to TX, how did AFS not find out? That may be the problem. Here in TX, the sales tax on the total cost of the vehicle is due at lease inception, can be payed up front or added into your payment, unlike other states where the tax is applied to each payment.
If it was done that way, there is an exception (link was provided above in another response), so you don't get taxed again if you buy out the vehicle from the leasing company. I don't know how it works with private party deals, but since the new buyer went through a finance company and a lien was placed on the vehicle by the finance company, I think the buyer is responsible for tax on the purchase price, his finance advisor should know how that works.
Since TX never got the tax for the vehicle when you owned it (tax was going to PA even though you didn't live there anymore), they may have placed a tax lien when they found out.

[i335i]

Originally Posted by IancoleTX

Says the guy from San Francisco.

HAHAHA

[Watwood]

Originally Posted by i335i

HAHAHA

Ha!

[saeyedoc]

Originally Posted by jafza05

Well I paid taxes on a month to month basis. I had my total lease payment spread out of the 36 month term and each month there was a portion of tax I paid on top of that. I don't understand why on a lease I would be responsible for paying tax on something I no longer have.

You were paying taxes on the lease payment, not tax on the total cost of the car, then spread out over 36 months.
Read some more on this, on private sales, the buyer pays tax on the sale price or "presumptive value", whichever is higher. There's a TX website where you can put in the VIN to get the presumptive value. If the sale if through the dealer, it's only based on sales price. This is triggered anytime the title is changed.
I think in your case, the tax is owed by the buyer, not you.

[slim_e90]

i recently did that with a toyota. i had to get teh title in my name first from TFS, then register it in my county (including paying taxes)... then i got the title. once i had the title, i sold it to a buyer i had lined up, who paid taxes again when he registered in to his name... this is in TN. the only winner is the state.

[mattsten]

Yes you have to pay sales tax on the balance owed (buyout) and then the new owner will pay tax when they register it. There is a very easy way around this, however, but you may be sol now. If the dealer you bought your bmw from had handled the transaction tax would only be paid once since they are tax exempt. You give them power of attorney and then they buy the car and sell it to your buyer for what you negotiated (probably plus doc fee), and since they are a dealer they don't have to pay tax. Additionally, they can treat the leased car as a trade in and you would only pay tax on the difference if you were purchasing a car. The taxation scenario here is really only avoidable if a dealer handles the transaction. Sorry, but I think you are going to have pay the tax for them to get the title, and then the buyer will pay the tax as well.

[dtc100]

The last two posts are correct I am afraid. I am in CA, last time I called asked about the lease end options, was told exactly that, if I paid off the leased car including sales tax on the payoff amount, I would get the title, I could then sell to a private party, who would then pay sales tax on the price he paid for the car.

Needless to say I decided just to give the car back to the bank. Come to think of it this is why you lease a car, so you can walk away from it at the lease end.

[jafza412]

I appreciate all the input everyone. The buyer and I haven't gotten any updates from his CU for about a 9 days now, so no idea what is going on.

Originally Posted by mattsten

Yes you have to pay sales tax on the balance owed (buyout) and then the new owner will pay tax when they register it. There is a very easy way around this, however, but you may be sol now. If the dealer you bought your bmw from had handled the transaction tax would only be paid once since they are tax exempt. You give them power of attorney and then they buy the car and sell it to your buyer for what you negotiated (probably plus doc fee), and since they are a dealer they don't have to pay tax. Additionally, they can treat the leased car as a trade in and you would only pay tax on the difference if you were purchasing a car. The taxation scenario here is really only avoidable if a dealer handles the transaction. Sorry, but I think you are going to have pay the tax for them to get the title, and then the buyer will pay the tax as well.

What you and the above and below posts are saying makes sense. But from what you are saying regarding the POA, is essentially what happened. The buyers credit union had me sign POAs to do the transaction and they paid Audi FS. I never received or paid any money in this transaction. Does that matter at all?

[saeyedoc]

Taken directly from the TX Administrative code:

http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tl oc=&p_ploc=&pg=1&p_tac=&ti=34&pt=1&ch=3&rl=70

(b) If, at the termination of a lease, a motor vehicle is sold by the lessor to the lessee and the lease contained an "option to purchase" at less than fair market value or a "must purchase" clause or if the vehicle is sold to the lessee at less than fair market value, the amount subject to the motor vehicle sales and use tax will be the total consideration paid the lessor by the lessee under the agreement, since the agreement will be considered a sale rather than a lease agreement. "Total consideration" means the amount paid or to be paid for a motor vehicle and all accessories attached to it at the time of the sale; total consideration does not include separately stated finance charges, carrying charges, service charges, or interest.
(c) If the transaction is considered to be a sale and not a lease, as described in subsection (b) of this section, no additional motor vehicle sales tax is due at the time the initial lessee/purchaser takes title to the vehicle, provided the correct amount of tax was previously paid on the total consideration. If the correct amount of tax was not paid on the total consideration, the lessee/purchaser must pay the difference when the vehicle is titled in his name.
(d) If the motor vehicle is sold to a person not privy to the lease or if it is sold to the lessee at fair market value, the amount subject to the motor vehicle sales and use tax is the agreed-upon sales price. (See Attorney General Opinion WW-711 (1959).)
(e) Motor vehicle use tax is due on a motor vehicle purchased outside of the State of Texas and leased and brought into the state for use upon the highway. The lessee of the motor vehicle is liable for such tax. If the lessee is a resident of this state or is domiciled or doing business in this state the tax is based upon the consideration paid outside the state by the purchaser of the motor vehicle, regardless of any use or depreciation of the vehicle subsequent to its purchase and prior to its use in this state. If the lessee is a new resident of this state as described in §3.71 of this title (relating to Definition of "Resident" and "New Resident"), the new resident may pay a new resident use tax of $90 imposed by Tax Code, §152.023, in lieu of the 6.25% use tax.

In my interpretation, according to this, since you had leased the vehicle in another state and were a new resident here, you would only owe $90 when you moved there.
If you bought the lease out, you would owe the remainder of the tax on the initial purchase price, since you never paid the entire amount of texas state tax, only the $90 new resident fee.
If leased vehicle is sold to someone other than you (as in your case), the buyer is subject to the tax on the purchase price.
I'm no tax attorney, but that's what I'm reading.

[mattsten]

Originally Posted by jafza05

I appreciate all the input everyone. The buyer and I haven't gotten any updates from his CU for about a 9 days now, so no idea what is going on.



What you and the above and below posts are saying makes sense. But from what you are saying regarding the POA, is essentially what happened. The buyers credit union had me sign POAs to do the transaction and they paid Audi FS. I never received or paid any money in this transaction. Does that matter at all?

No it does not make any difference. The dealer is basically assigning your interest to them and then purchasing, and they don't have to pay sales tax on the purchase. The POA gives them the ability to sign the paperwork on your behalf. I think you are best off staying on top of this and paying it. You don't want an issue to arise where Audifs says there is money due and have anything end up on your credit report. If the CU does not have the title you have an issue that needs to be resolved. The CU could care less what happens to you...