How to Pay Taxes on Lease Buyouts

A lease is a long-term rental agreement in which you make payments on a car that belongs to the dealership. Once you reach the end of the lease you have the option to purchase the car by paying a lump sum. This is called a lease buyout. As with any other purchase there is a tax involved with a buyout. You must pay this tax to complete your purchase of the vehicle, but, it is the responsibility of the dealership to forward that money to the personal property taxation agency once you complete the paperwork.

Instructions

1

Obtain a dealership representative's signature in the lien holder section of the title releasing it from debt. This signature signifies the lien has been satisfied and the title is clear.

2

Sign the documentation from the Division of Motor Vehicles requesting your new registration and title. Review and sign any paperwork necessary to end your lease with the dealership, also known as the lessor.

3

Pay the amount of taxes to the lessor along with any associated fees allowed by law. These fees allow the Division of Motor Vehicles to issue a revised title to you that is free of liens. Keep your receipts from this transaction.

4

Ask the lessor to mail your paperwork to the DMV as soon as possible. Wait for your new registration and revised title to arrive in the mail.

5

Contact the Division of Motor vehicles and your local property tax collector. Confirm your vehicle's legal status with both. Contact the dealership in case of discrepancies.