Tips on Buying Cars: Trade In Leased Vehicle, 2006 nissan murano, nissan murano

Question
Hello,

I leased a 2006 Nissan Murano in 4/06.  The lease terms were for 42 months, and to date it has been approximately 21 months.  I was alotted 12k miles per year and I'm currently at around 16K, 5K under the max.  The vehicle is in good condition with normal wear and tear.

I am bored with the vehicle and want to trade it in for something else, to buy outright.  What are my options?  Can I go to a dealership and turn the vehicle in, and if so what kind of hit might I take?

Thanks in advance,
Josh

Answer
It is possible to trade in a lease vehicle early for something else, but due to federal tax laws you'd most likely owe far more than the vehicle is currently worth.  (How do tax laws figure into this?  Because Nissan was able to write off most of that vehicle when they leased it to you; if you turn it in early, they have to pay back a big chunk of that depreciation to the IRS, which they charge back to you in the form of a high lease payoff.)  The only way to know how much it will cost is to call Nissan and get the closeout, then compare that with what dealers are willing to offer as a trade.