If I buy a currently leased car and later sell it to my son, will we get nailed for double sales tax?

Question

I am considering buying a leased car at the residual value, keeping it for 6-12 months, and then selling it to my son. I realize I will be responsible for the sales tax when I purchase it (since I've already only paid sales tax on the depreciation). However, when I sell it to my son, will he then also be responsible for sales tax? Seems to me the state already collected the tax on the full value of the car when I bought it. Isn't this double taxation. BTW, I live in NJ.

Answer 1

No, just submit a Statement of facts, when you got to transfer the vehicle, to the effect that the car is passing to a family member, therefore making it a tax exempt transaction.

Answer 2

you can simply put it as a "gift" on the title, and then charge him whatever you were going to. The DMV most likely wont question it because you are father and son. You dont HAVE to put the correct selling price on the title for a private sale, they have no way of really checking it. And no, it isnt considered double taxation, because they are two seperate sales. Same reason a dealership can charge tax on selling used cars.... the "double taxation" doesnt apply to tax on the same vehicle more than once, rather, you cant tax twice on the same sale or income.

For instance, if I have money that I put in a savings account, that money would be taxed from my income. but they will still tax any interest I make on it. But when I die and my kids inherit it, that cant be taxed, because it already was. But then they made "inheritance tax".... so now they can, because it is a different KIND of tax. boo on you, tax man!

Answer 3

Check with your DMV. Many States allow the transfer of a vehicle, within the immediate family, to be a gift. This applies even if he is actually paying you for the vehicle.(not that I would mention that fact) States make big bucks on the sale of autos by getting taxes each time they are sold.

Answer 4

Yes, unfortunately most lease companies will only allow you to buy the car, not a family member, so there will be double tax. But, i suggest going to the dealer, having them buy it, and resell to your son. We do it all the time, arrange the financing and it works out great. That way, when they buy it, they don't pay tax, so only your son willl.

Answer 5

If ownership changes hands, then yes, he'll have to pay sales tax. The easiest way to (sorta) get around it is to have the sale paperwork (from you to your son) say you sold it for $1, or something low (check to see if there's a limit in your state). They base sales tax on the amount it sold for, not the estimated worth.

Answer 6

you will ought to purchase out the hire first, after which you would be unfastened to sell it. you have not got legal identify to the motor vehicle at recent, so which you won't be able to legally attempt to sell it. Even attempting to accomplish that must be construed as fraud. in basic terms a fool could resign money to you without you delivering a signed identify in replace. you have gotten the skill to coordinate this with the leasing business enterprise first so as that the customer sends the payoff directly to them and substances the version. The leasing business enterprise could then deliver the identify directly to the customer. shop in mind that the buyout cost contained in the hire contract is valid in basic terms on the tip of the hire. in case you injury the hire early, it is going to possibly be a lot greater! Get the present hire cancellation expenditures from the leasing business enterprise earlier you proceed.

Answer 7

Everytime you transfer the car, you have to pay sales tax. If it's transferred 50 times, you have to pay 50 times.

But you can always gift the car and pay $0 tax.... everyone gets $1M lifetime gift exemption.

Answer 8

It may be multiple taxation but, I think every time there is a title transfer, sales tax is applied. Call your local DMV to be sure.