rjprjprjp

Hello all, I have a 3-year lease for a 2010 IS250 that is ending in a month w/o a lease-end buyout of about $24K. My parents need a car, and my ultimate goal is to take this car and have my parents as the ultimate owner. I was hoping to get feedback on: (i) whether the buyout price is negotiable (I've heard Lexus is difficult about this), (ii) if it makes more sense to have my parents lined up in a third-party buyout transaction, or (iii) buyout the lease myself then either gift it to my parents or sell it to them for a nominal amount, like $1.

Between my parents and me, we can sort out who pays what, no problem. We just want to avoid money paid to third parties (particularly the IRS...).

I'd be grateful for any advice on this, thanks so much! Oh, this is in the state of NJ by the way.

rjprjprjp

sorry, i meant with a lease-end buyout, not without, obviously...

rominl

iTrader: (4)

i believe you can buy out on the lease but write it to some 3rd party name. that's who my s550 was done, and i think i saw some paperwork about that with our gs. that way you only deal with sales tax once

96SC4

iTrader: (2)

hmmm, wife and i are buying out a friends lease in June... i need to look into this some more myself...

mmarshall

Welcome to CL and CAR CHAT...I see you are a new poster.

You say you and your parents want to avoid paying money to the IRS. Is there any way your parents can (honestly and legally) use the car for buisness? If so, there's your chance...return the car to the dealership, have your parents re-lease it as a used car (if the dealership and Lexus will allow that...leases on used cars are becoming more common now), and then they can deduct their lease payments each year on their Federal taxes.

Joeb427

iTrader: (1)

You can buy it and sell it to your parents and they would not pay sales tax with the family $1 bit but you'll pay sales tax.No way around not paying the sales tax unless you or your parents have a business sales tax ID number as Mmarshall added.That may be the only way.

My0gr81

Cars in Ontario Canada are subject to a sales tax, even on private transaction, at registration on the assessed "fair market value". In the case of a lease, the best way to do this would be:

1- Have the 3rd party buy out the lease at term's end. The 3rd party pays the tax once as there is only one transfer of registration.

2- Transfer the lease to the 3rd party a month or so before term's end. The 3rd party can then negotiate an extention of the lease with the finance company or buy out the lease. Taxes are paid as part of the monthly payments and on the residual portion at time of buy out.

Any other way, and one would be subject to the sales tax due on the buy out amount, and then as part of the "fair market value" assessment. It's important to note that FMV doesn't always equal selling price, but in most cases does.

rjprjprjp

thanks all. yeah, it's clear either me or my parents will have to pay sales tax, just want to make sure we're not double-paying in anyway. unfortunately neither of us will be able to claim it for business-related use.

i think in NJ, i would buy out the lease, pay sales tax on that, and then i could gift it to my parents (apparently i can gift something to a married couple, each w/ a $13K limit, bringing the tax-exempt amount to $26K). since the 'fair value' of the car, i.e. the buyout amount, is $24K, i think it can slip under this threshold.

BertL

OP, good luck in whatever you may do, and thanks for starting this thread. I've never leased a vehicle, so learned something following along. TU!

rominl

iTrader: (4)

did you try talking to lexus? maybe it's different from CA, but i think there might be a way to do the buyout and just title it to someone else