Selling a car privately? Any taxes owed? Lien on it. (for sale, leasing)

[a_guerrajr]

Hi All,

Considering putting up my used car up for sale since trade-in value is crap.
Let's assume I list it on AutoTrader/Craigslist. Buyer likes it and says I'll buy it. What then?

My car has a lien since a balance is still owed to the lender. Let's say I owe $10K, the buyer offers $8K. I come to the table with the difference and pay off the balance. Receive the title and sign it over to the new owner. (of course, the buyer is aware vehicle has a lien, bill of sale, etc.)

How does it work in terms of taxes? I already paid taxes on this vehicle. When I sell it do I recover an amount? Does the buyer have to pay taxes on the leftover amount? Do I have to pay taxes again on what I sold for? This is where I'm confused. Or given that I've already paid the state tax, whatever it sells for is what I get to keep?

I'm trying to clarify this before I post it online for sale.

Thanks in advance for guidance.

[resonator]

You have no negotiable title to give anyone.


You must satisfy the amount owed on the lien so that the buyer can get good title.



The logistics are tricky but do-able so that the deal will only take a few hours. Quite a few hours extra if the buyer is also financing the purchase.


If there is a tax issue, it is on the buyer, not the seller.


There are stand-alone car title kiosks / businesses around which can help for a few dollars.

[a_guerrajr]

Originally Posted by resonator

You have no negotiable title to give anyone.


You must satisfy the amount owed on the lien so that the buyer can get good title.



The logistics are tricky but do-able so that the deal will only take a few hours. Quite a few hours extra if the buyer is also financing the purchase.


If there is a tax issue, it is on the buyer, not the seller.


There are stand-alone car title kiosks / businesses around which can help for a few dollars.

Right, I'm aware of the title.

My concern is more around taxes. I was reading on TXDMV and it looks like the buyer pays taxes on the purchase. But why would the new buyer pay taxes if I've already paid taxes on this vehicle? If anything I'm owed any difference.

[kreeyax]

Originally Posted by a_guerrajr

Right, I'm aware of the title.

My concern is more around taxes. I was reading on TXDMV and it looks like the buyer pays taxes on the purchase. But why would the new buyer pay taxes if I've already paid taxes on this vehicle? If anything I'm owed any difference.

You always pay sales tax (6.25%) on a used vehicle, regardless of where you buy it. If you buy it at a dealership, you pay taxes at the dealership. If you buy it from a private owner, you pay taxes when you title it. It is based on SPV (standard presumptive values), so you can't get away with selling someone a vehicle for $1 to avoid sales taxes. If a vehicle changes owners 10 times, taxes get paid on the vehicle 10 times. Death and taxes...

[shanv3]

Originally Posted by a_guerrajr

Hi All,

Considering putting up my used car up for sale since trade-in value is crap.
Let's assume I list it on AutoTrader/Craigslist. Buyer likes it and says I'll buy it. What then?

My car has a lien since a balance is still owed to the lender. Let's say I owe $10K, the buyer offers $8K. I come to the table with the difference and pay off the balance. Receive the title and sign it over to the new owner. (of course, the buyer is aware vehicle has a lien, bill of sale, etc.)

How does it work in terms of taxes? I already paid taxes on this vehicle. When I sell it do I recover an amount? Does the buyer have to pay taxes on the leftover amount? Do I have to pay taxes again on what I sold for? This is where I'm confused. Or given that I've already paid the state tax, whatever it sells for is what I get to keep?

I'm trying to clarify this before I post it online for sale.

Thanks in advance for guidance.

The buyer pays 6.25% on the SPV as calculated from this link https://www.txdmv.gov/spv-calculator

You dont pay any thing.

[a_guerrajr]

Thanks for the help.
I guess this is how the part of trading in allows for a tax credit.

Well, I guess sucks for the buyer. Luckily the SPV is low.

[jtothemak]

When trading in the vehicle to a dealer is where you get the "Tax Break". Say they give you $10K for your trade and the new vehicle is 15K. So at the dealer you only pay taxes on $5K saving you $625 on taxes on your new vehicle technically making your trade in worth $10,625. This is only good when trading in a dealer and as previously stated does not apply to private party.

Selling a vehicle with a lien especially when you owe more than the vehicle is worth makes it for a harder sell private party. A lot people buying private party want the title signed over to them right away and if there is a lien they proceed with caution because they have a waiting period and working with you to get everything worked out making sure you hold up your end of the deal.

[resonator]

What's really fun is leasing a car. You pay tax on the full value of the car on day one. And pay again, if you decide to buy the car at lease end.

[a_guerrajr]

Originally Posted by jtothemak

When trading in the vehicle to a dealer is where you get the "Tax Break". Say they give you $10K for your trade and the new vehicle is 15K. So at the dealer you only pay taxes on $5K saving you $625 on taxes on your new vehicle technically making your trade in worth $10,625. This is only good when trading in a dealer and as previously stated does not apply to private party.

Selling a vehicle with a lien especially when you owe more than the vehicle is worth makes it for a harder sell private party. A lot people buying private party want the title signed over to them right away and if there is a lien they proceed with caution because they have a waiting period and working with you to get everything worked out making sure you hold up your end of the deal.

Originally Posted by resonator

What's really fun is leasing a car. You pay tax on the full value of the car on day one. And pay again, if you decide to buy the car at lease end.

Thanks.
Well it is listed on AutoTrader and soon on other mediums.
Hopefully it won't scare buyers.