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How to avoid paying taxes twice on vehicle purchase?
Posted on 5/15/22 at 4:08 pm
Posted on 5/15/22 at 4:08 pm
My mother-in-law's lease just came up on her vehicle and my wife & I are getting the car from her. How do we avoid having to pay taxes twice in the sense that the lease has to be bought out (taxed the first time) then the car has to be given/donated/sold to my wife & me (possibly taxed the second time)? Do we have to buy out the lease directly (if that's even possible) or do my in-laws have to buy the lease out and then "donate" the vehicle to us?
3
Posted on 5/15/22 at 4:27 pm to LSUDbrous90
Recently transferred my son's vehicle out of my name into his. The transfer was exempt from sales tax. So, thinking that your in-laws should take title from the lease buyout then transfer to your wife, in her name.
Posted on 5/15/22 at 8:08 pm to LSUDbrous90
I’m pretty sure the taxes are included in the monthly lease payment.
You would only pay taxes on your purchase.
Is she buying a new car? Do an in/out with the new dealer.
You would only pay taxes on your purchase.
Is she buying a new car? Do an in/out with the new dealer.
This post was edited on 5/15/22 at 8:09 pm
Posted on 5/16/22 at 9:04 am to Xanthus
quote:
Recently transferred my son's vehicle out of my name into his. The transfer was exempt from sales tax. So, thinking that your in-laws should take title from the lease buyout then transfer to your wife, in her name.
Sounds simple enough.
quote:
I’m pretty sure the taxes are included in the monthly lease payment.
You would only pay taxes on your purchase.
Is she buying a new car? Do an in/out with the new dealer.
My mother in law already got another vehicle on a 3 year lease. My understanding is they buy out the lease and pay taxes on that then would gift/transfer/donate the vehicle to us and that is tax exempt if I understand correctly.
Posted on 5/16/22 at 10:09 am to LSUDbrous90
She can assign the buy option to you, no need to do two transactions.
Posted on 5/16/22 at 10:30 am to LSUDbrous90
quote:Are they fitting the car to you or are you purchasing it from them? You could be committing fraud here.
My understanding is they buy out the lease and pay taxes on that then would gift/transfer/donate the vehicle to us and that is tax exempt if I understand correctly.
I would look into an assignment of the lease buy option as opposed to dancing with a fraudulent transfer.
Posted on 5/16/22 at 11:45 am to WDE24
quote:
Are they fitting the car to you or are you purchasing it from them? You could be committing fraud here.
I would be paying them for what they bought out the lease for. Can you not just transfer the ownership to a family member? Feel like this would happen all of the time with parents buying 16 year old johnny a car then eventually transferring it to him later down the road.
quote:
She can assign the buy option to you, no need to do two transactions.
Not sure if that transaction is done yet or what. My father-in-law is handling it all and we are already driving the vehicle. He is an attorney so assume he knows what he is doing because I am surely not going to pay sales tax twice.
Posted on 5/16/22 at 12:53 pm to LSUDbrous90
Some states exempt sales tax if you sell the vehicle within 10 days of purchase too.
Posted on 5/16/22 at 12:53 pm to LSUDbrous90
quote:
would be paying them for what they bought out the lease for. Can you not just transfer the ownership to a family member? Feel like this would happen all of the time with parents buying 16 year old johnny a car then eventually transferring it to him later down the road.
You can, my wife has gifted her kids a couple of cars. If you need to pay your in laws for the car, and you dont need financing just give them the money outside of the transaction, no one is going to come to your house, and arrest you for tax fraud.
Posted on 5/16/22 at 1:37 pm to EA6B
quote:
If you need to pay your in laws for the car, and you dont need financing just give them the money outside of the transaction, no one is going to come to your house, and arrest you for tax fraud.
No financing needed. Going to pay them on the side outside of the transaction. Thanks.
Posted on 5/16/22 at 1:59 pm to EA6B
quote:
you dont need financing just give them the money outside of the transaction
The car is still going to have to be retitled
Posted on 5/17/22 at 12:05 pm to LSUDbrous90
quote:
just give them the money outside of the transaction, no one is going to come to your house, and arrest you for tax fraud.
This. The title change won’t matter, have heard of this being done tons of times with no issue
This post was edited on 5/17/22 at 12:09 pm
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