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I'm helping out a friend buy a new car on the mainland and then ship it to Maui. Based on his research it's about $3,000-5,000 to as high as $10,000 above the going rate for a brand new car on the mainland compared to Maui, depending on the make and model.
My questions are:
1. What is the tax implication when a brand new car is bought in the mainland and brought to Maui. Based on some research, I think it's around 4% is this correct or not?
2. At what point is the car considered no longer brand new and doesn't get taxed? Is it after one year or even less than a year?
I was wondering if anyone has any info on this or has experienced in buying a brand new car on the mainland and shipping it to Maui or any parts of the island.
The tax you pay for a new car is based on where you are a resident. For instance, Oregon has no sales tax but the dealer in Oregon will collect taxes based on where you will be registering the car.
The tax you pay for a new car is based on where you are a resident. For instance, Oregon has no sales tax but the dealer in Oregon will collect taxes based on where you will be registering the car.
OK, the car will be registered in Maui, I'm not sure if it was a sales pitch or scare tactic by the salesman, but the salesman at the Maui dealer informed my buddy that he will have to pay double sales tax (one from the mainland if the state has one and one from the island) for buying a brand new car on the mainland in order to protect the local dealers on the island. Any truth to this?
So, what you're saying is that there is no difference than buying a car on the mainland, there's no "penalty tax" for buying on the mainland to protect local island dealers?
I "believe" there is no "penalty tax". The tax paid on a vehicle is based on where you register the car. For instance, let's take the Oregon example - if you live in Washington, you can't simply stroll down to Oregon to pay no sales tax on a car. If you paid a tax on the mainland - it would be offset by the tax in Hawaii. It is probably easier to ask the mainland car dealer in that state if they collect tax for a car to be registered in another state.
I bought a White Dodge Viper (hence my screen name) in Florida - and paid the California sales tax when I lived there and no penalty tax.
"A Hawaii resident purchases an automobile in Oregon while on vacation and uses it to drive across the country and back to the West Coast. He imports the car into Hawaii four months after the purchase. The importation of the car to Hawaii is subject to the use tax because the owner was not a bona fide resident of another state at the time of the purchase."
"Tanimoto gave as an example a resident of state X buying a car in that state for $20,000 and paying a 3 percent sales tax ($600) imposed by that state. Two months later, he ships the car to Hawaii.
If the landed value of the car is $21,000, the Hawaii use tax would be $840 (4 percent of $21,000). However, the owner may offset the $840 Hawaii tax by the $600 sales tax he paid to state X, reducing his use tax liability to $240, Tanimoto said."
So in my buddy's case since it will be registered in Maui, it would be a 4% tax even if he bought it in (Oregon, Delaware, New Hampshire) where there is no sales tax, but nothing more than the 4% tax, in other words no "penalty" for buying in the mainland as the salesman noted.
This is from an old article, perhaps totally out of date, but here it is from 2003:
Quote:
In fact, any tax paid on the purchase of the car to another state may be used to offset the Hawaii use tax liability.
Quote:
However, if someone pays a sales, use or general excise tax to another state on the sale of the automobile, the amount paid may be used to directly offset the amount of any Hawaii use tax that is due.
Older used cars bought through a personal sale are tax free in Hawaii:
Quote:
Meanwhile, Tanimoto noted that the use tax does not apply to vehicles bought via a "casual sale," which means an "occasional, isolated, irregular, infrequent or incidental sale of tangible personal property which is not ordinarily sold in the course of the person's trade or business."
For example, a Hawaii resident who buys a used car in Oregon from a person not normally engaged in the business of selling cars and brings it into Hawaii two weeks later would not be subject to the use tax. That's because had the "casual sale" occurred in Hawaii, the gross receipts from the sale would not be subject to the GET.
If you read the entire article, it will at least give a good starting point for forming questions to ask when you call Maui County directly, who can give you current info.
If you read the entire article, it will at least give a good starting point for forming questions to ask when you call Maui County directly, who can give you current info.
Yes. If you buy a car on the mainland and ship it before 90 days you still have to pay the Hawaii tax even if it’s bought in another state.
Let's clarify:
A Hawaii resident flies to the mainland to buy a new or used car from a dealership, which can often save money even with shipping, and you immediately ship to Hawaii - you only pay the Hawaii taxes.
A Hawaii resident flies to the mainland and buys a used car from a private seller and ships it to the mainland. You do not pay Hawaii taxes.
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