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Have a couple dumb questions I should probably know, haven't bought a car in a while and may be moving.
-if I buy a used car from a private party owner in one state, but live and have an address in another, which sales tax do I pay?
-if I buy a used car from a private party owner in one state but am moving within say a few weeks to another state, and will register the car in that new state I'm moving to as soon as I get there, do I still pay the sales tax in the state I bought the car or state moving to?
Can't remember the process how car registration works in this situation, do I just leave the existing license plates on the car from the state I bought the car in, and then register the car in the new state and get their license plates in a few weeks when I move there?
Just been a long time since I bought, and I have never bought right before a move before.
The sales or excise tax is going to vary by state but typically you'd pay it in the state where you finally register the car. That's for buying out of state.
In the "moving in a few weeks" scenario the previous owner will want you to register the car ASAP to get away from his responsibility for it, so you'll pay there. When you move there might be some sort of offset in the new state.
I am sure it varies from state to state, I bought a car from another state while living in NJ. When I went to register the car, there was a place to write how much you paid for the car, and then they figure out the tax to charge you.
So it is on the honor system. A less than honest person could easily get away with saying they paid $1000 for a $20,000 car, and end up paying very little tax. I’m not saying you should do that, just stating the facts.
So it is on the honor system. A less than honest person could easily get away with saying they paid $1000 for a $20,000 car, and end up paying very little tax. I’m not saying you should do that, just stating the facts.
I doubt it. Any claim of a purchase price below low book is going to get questioned, in most states I've dealt with.
I once bought a Volvo 240D in very good condition from a co-worker who was both in a hurry to get back to the east coast and did me a favor; I paid him $500 and he ran away happy. DMV wouldn't value the car less than low book of about $3500 unless I brought in a validated appraisal. That's pretty much universal, IME.
Yeah, you can fudge purchase price a little, by paying the seller cash over the top or whatever, but good luck straightening out any title/registration/smog/warranty/general issues if you do. It becomes a bit like going to the cops because you were ripped off in a drug deal.
legally, the sales tax due on a vehicle transaction are triggered at the moment of the transaction. So if you buy in a state that you reside in, you owe the sales tax to that state, even if you're moving on in a short time frame.
how well these transactions are tracked, taxed, and enforced varies greatly from state to state.
in some states, a notarized bill of sale stating the price of the car is required.
in other states, your affidavit at the time of registration is sufficient.
in Texas, they don't care what you paid for the car, they have state valuation tables and that's what you'll pay sales tax on. Yes, even if you buy a "fixer-upper distress sale" car for a few hundred bucks, if the state value says it's $2,000, you pay sales tax on the $2,000.
as well, transfer of license plates varies greatly from state to state. Some states, the plates stay with the car. Some states, they stay with the owner.
the bottom line is that you're responsible for the taxes and it's good to check with your local taxing authorities/DMV as to what is required.
anesthesia MD wrote: "So it is on the honor system. A less than honest person could easily get away with saying they paid $1000 for a $20,000 car, and end up paying very little tax. I’m not saying you should do that, just stating the facts." Not very likely in the western states I do business in. The tax folks aren't dummies … you try to claim an exceptionally low value for a car and they'll be having you sign purchase price affidavits with big warnings about perjury. Do something like your extreme example (and yes, I've seen folks try to do that to avoid sales tax) in some states and you'll trigger an audit. They will check your bank, go back to the seller for their recollection of the price, check out your spending habits/patterns, and so forth. From their perspective, the instant the transaction took place, the sales tax due is their money, not yours. They can get very aggressive about collecting what they think is their due. If it's a distress car needing repairs leading to the low valuation, you'd best be prepared with photo documentation and estimates of repairs needed by legitimate auto repair shops to back up your claim of low purchase price.
Do keep in mind that some states exempt in-family sales taxes on private car transactions.
I doubt it. Any claim of a purchase price below low book is going to get questioned, in most states I've dealt with.
I once bought a Volvo 240D in very good condition from a co-worker who was both in a hurry to get back to the east coast and did me a favor; I paid him $500 and he ran away happy. DMV wouldn't value the car less than low book of about $3500 unless I brought in a validated appraisal. That's pretty much universal, IME.
Yeah, you can fudge purchase price a little, by paying the seller cash over the top or whatever, but good luck straightening out any title/registration/smog/warranty/general issues if you do. It becomes a bit like going to the cops because you were ripped off in a drug deal.
I didn’t personally do it....
...but hypothetically, if I did, it would have been about 20 years ago, and I wouldn’t have had any of the issues you are talking about.
DMV doesn’t even question it. No appraisal. Nothing. Just some state employee, trying to get through another day. They just look at the number and figure out the tax based on that number, and move on to the next person.
So just for some hypothetical examples and random thoughts:
-lets say I lived in MT (a no sales tax state) and bought a car from a private seller in a neighboring state. As soon as I bought it I drove it home and registered it. I would pay no sales tax?
-I believe in WA for example, if say you buy a new car or a used car from a used car dealer in neighboring states of OR or ID, you pay the WA sales tax when you register it. I'm not sure if every state that neighbors a "no sales tax state" does the same. But I would guess it to be the case. Like if you lived in CA and bought in OR, my guess is you pay the CA sales tax. Not sure about if you buy in NH but live in a state that neighbors NH.
-Sounds like it would not be smart to buy a car in a high sales tax/high registration state even if moving in a "few weeks". Because then pay a high sales tax and second registration cost when I get to the new state (of course I could wait a year to register in the new state I guess).
The reason for buying weeks before moving would be a more suitable car/truck needed for a long drive to the new state. And the state leaving being a "no salt on roads" west coast state, and the state moving to being a "salt the roads" northern state.
So just for some hypothetical examples and random thoughts:
-lets say I lived in MT (a no sales tax state) and bought a car from a private seller in a neighboring state. As soon as I bought it I drove it home and registered it. I would pay no sales tax?
-I believe in WA for example, if say you buy a new car or a used car from a used car dealer in neighboring states of OR or ID, you pay the WA sales tax when you register it. I'm not sure if every state that neighbors a "no sales tax state" does the same. But I would guess it to be the case. Like if you lived in CA and bought in OR, my guess is you pay the CA sales tax. Not sure about if you buy in NH but live in a state that neighbors NH.
-Sounds like it would not be smart to buy a car in a high sales tax/high registration state even if moving in a "few weeks". Because then pay a high sales tax and second registration cost when I get to the new state (of course I could wait a year to register in the new state I guess).
The reason for buying weeks before moving would be a more suitable car/truck needed for a long drive to the new state. And the state leaving being a "no salt on roads" west coast state, and the state moving to being a "salt the roads" northern state.
Anyway, thanks for the great responses!
I don't know but what some states do is not call it a "sales tax" but an excise tax or transfer fee. It gets the same amount of money just a different name.
DMV doesn’t even question it. No appraisal. Nothing. Just some state employee, trying to get through another day. They just look at the number and figure out the tax based on that number, and move on to the next person.
Not always, not if the number's way out of whack. But you have a BOS for $5k and you paid $8k? They'll never question it.
Having DMV workers distracted is a good thing. I registered a specialty car in a difficult state in the week the state was issuing involuntary furloughs and other nonsense to stretch the budget. The inspector went right past some (trivial) things that would have been written up in any other week... he knew it, I knew it, he knew I knew it...
But the same state got me in the end, for property taxes on a vehicle almost a year after I'd left, because I'd failed to cross the I's and dot the T's precisely. Arrgh...
I am sure it varies from state to state, I bought a car from another state while living in NJ. When I went to register the car, there was a place to write how much you paid for the car, and then they figure out the tax to charge you.
So it is on the honor system. A less than honest person could easily get away with saying they paid $1000 for a $20,000 car, and end up paying very little tax. I’m not saying you should do that, just stating the facts.
Again, other states may be different.
It goes by the amount listed on the bill of sale here. If the buyer is pleasant to deal with and doesn’t try to haggle me too much, I’ll do them a favor and write a lower amount on the bill of sale (after receiving the money of course).
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