Vehicle Sales Tax Questions

timmboj

Actually its now VW Financial Services.

kellygreg

We are close to buying a car that is listed for 18,000. We currently have a trade-in that is valued at 13,000, but we owe 9800 on it. We are planning on using cash to pay for the difference of the new car, but is there a tax benefit to paying off the old car first prior to trading it in? I guess I'm wondering if sales tax is calculated off of purchase price minus the net value of your trade-in (trade-in value minus amount owed) or on the full value of the tradein.

Would sales tax be calculated like this:

18,000 - (13000 - 98000) = 14800 Taxable Amount

OR

18,000 - 13000 = 5000 Taxable Amount

If it is the first one, then I think we'd be best off paying off the trade-in before trading it in.

Hopefully that makes some sense.

kyfdx

Your loan balance should have no effect on the tax paid.

It should be Selling price - trade value = Taxable amount.

regards,
kyfdx

joel0622

The pay off has no bearing on the taxes you pay. You would pay taxes on the $5K difference. If you pay it off before you trade you will have to wait for the title to come. If you show the pay off when you trade then the dealer can chase the title.

kellygreg

Thanks to you both for the quick responses. I appreciate it!

jayd123

I just graduated and a very well-off family friend has offered to sell me an old but nice car of theirs for over 50% off blue book as a graduation present. I understand that since I live in Georgia now, I DO NOT have to pay sales tax on private party titles when I register the vehicle. Is this true?

I will be moving to CA for my first job in September and will need to register this car when I move out there (in the first month maybe?). I understand that CA charges a sales tax on private party titles. From their website, if you acquire a car and move into CA within a year from purchase date, you are expected to pay CA sales tax on private party titles.

Will they make me pay the tax on the fair market value of the car that is twice the amount that I paid for it? Or is there a way to show them that since I did not have to pay sales tax in GA, I do not have to pay it in CA.

Thanks for your help in advance,
--Jason

chlock

I've spent an hour trying to find this info in the messages because I'm sure they've been asked before...but I'm new. I'm tired of wasting time and was hoping someone would help answer my questions.

I had a trying day at two different dealerships today with conflicting information. I live in NC and want to lease. Sales tax here is a 3% highway use tax. Is it computed on the total MSRP of the vehicle or MSRP minus the residual (the part I'm making payments on) I realize there are other fees involved that I'm not addressing.

Also, one of the dealerships I'm negotiating with is in VA, the other NC. From past experience I understand that I pay tax where I live. So living in NC and buying in VA should not effect the way they are computing the tax, right? The VA dealership is incorporating sales tax as well as property tax into the lease payments. They are claiming property tax is 6% of the monthly payment. Is that correct?

Thanks for the assistance.

cmcclenaghan

I have an odd situation. We decided to purchase my mother's car when her lease was up. Honda American Credit would only let the lease holder purchase the vehicle, so we wrote her a check (sales tax included) and she sent them the check. She now has the title and we need to transfer it to our names. We do not want to pay sales tax again. Can we draw up a bill of sale for $1? We live in Ohio and so does she.

Thanks

cccompson

So, you gifted your mother the money to buy the car and now she wants to gift the car to you, right?

Other than possible Federal gift tax issues (running both ways here), there's should be no problem with the title transfer. Obviously, a gift never involves a bill of sale. Family members gift cars all the time to each other and the "seller" (old owner) merely writes "gift" in the "selling price" area in the assignment section on the back of the title.

pat

I could be wrong, but I believe that if you do that in Virginia the DMV assigns a fair market value in order to determine the tax. Otherwise no title transfer.

cccompson

There's no such procedure in Ohio where (absent fraud) tax is levied on the declared sales price - period.

cmcclenaghan

So does that mean that I need to declare a sale price - like a dollar. Would that work?

steve326a

Usually there is no sales tax on vehicle transfers if they are from immediate family members such as mother, father, sister, brother.

Steve

hetz0085

I leased a vehicle in NH, where I am from, in April of this year and pay no sales tax. I will be moving to CA in the near future and am wondering if I will have to pay sales tax when I register the car in CA.

kyfdx

CA collects tax on the monthly payment.. Your leasing company will add that amount on to your payment, once you change your address.

Tax rate in CA varies by location, but is around 8.25%, more or less.. Multiply that by your current payment, and that's how much it will go up.

regards,
kyfdx
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ws46

I am considering buying a car in either MA or OH, but I need to transfer it to NY. How will the taxes work out in this case?

I am worried about paying taxes in MA (or OH) and then having to pay taxes on that vehicle in NY.

thanks,
ws46

ws46

Answered my own question after browsing the DMV site.
___________________
# If you paid out-of-state sales tax, show the out-of-state dealer bill of sale. The bill of sale must show the purchase price and the amount of out-of-state sales tax paid to the dealer. Use form DTF-804 to claim credit for the state and local sales taxes you paid in the other state. This process can reduce the amount of your NYS sales tax if NYS and the other state have an agreement about sales tax.

esomer_q45

http://www.boe.ca.gov/pdf/pub34.pdf see page 2. three requirements to be exempt of CA sales tax for out of state buyers. 1. Evidence of customer's out of state address. 2. Delivery must be outside CA. 3. Signed statement of intended use outside Ca.

I see a business opportunity to deliver CA cars to Vegas or Reno. I hope to get a Hybrid Altima from CA on the next couple days. I will let you know how it goes.

jayd123

I cannot find my answer on the CA dmv website and was hoping someone can help me .

I am buying a used car in GA but moving to CA t1-2 months after purchasing it. Will I be required to pay CA sales tax when I move to CA? Or should I not pay the GA sales tax and wait until I move into CA? If so, how would CA determine sales tax on vehicle .. i.e. fair market value vs. bill of sale? thanks in advance.

ropaul

I live in Maryland and leased a car from a dealership in Maryland. I am thinking of purchasing the car once the lease is up (3 weeks). When I asked the dealer (where I leased) if I would have to pay sales tax on the residual amount, they said NO I would not have to, since I already paid sales tax on the full purchase price of the car. But when I asked the same question to BMWFS, they stated that YES I would have to since the DMV would assess it once the title is transferred (or something like that). Who is correct in this matter?

I posted the following related question in another lease thread:

My lease of a 2004 330i is about to end, and I am interested in purchasing the vehicle. I live in Maryland and the car only has 25,000 miles.

Is there any way I can avoid paying "double tax" on the car, since I already paid sales tax on the full purchase price of the vehicle when I initially leased the car? Are there particular dealerships or other 3rd parties who can offer some kind of paid/unpaid service to help avoid paying tax again?

alanchase

Hope someone here can help and spare me hours of time on the phone tomorrow with various civil servants. I reside in NY and I recently purchased a new car in NJ. When I picked up the car I got a 20 day NJ temporary registration and filled out NJ tax form ST-10 which exempted me from paying NJ sales tax. Previously I would have received an MCO from the NJ dealer and taken that to the NYS DMV and paid the NY sales tax and registered the vehicle. However the NJ dealer says he cannot give me the MCO, he can only obtain a NJ title and to do that I need to pay him the NYS sales tax which will be indicated by a sales tax stamp on the NJ title. This doesn't seem correct as NY and NJ do not have sales tax reciprocity and it seems I would be asked to pay the sales tax again when I go to register the vehicle in NY. The NJ dealer can't/won't fully explain why he's not able to give me the MCO. Anyone with a similar experience that can comment? Thanks in advance...

volvomax

When you leased the car,did you cut a check for the full sale stax?
If so,then you don't pay again.
Look at your lease agreement and see if there is a section that deals w/ taxes.
Most states,the tax is paid per month as part of the lease payment.
In cases like that , BMWFS is correct in that you never paid the full tax on the car.

alanchase

This has boiled down to a very strange situation. The dealer now claims that their franchise agreement with Toyota prevents them from giving me the MCO/MSO for this vehicle. They said (if you can believe this - I will be following up with Toyota USA once all is said and done) that if they give me the MCO then I could export the vehicle out of the country (to Russia for example is what the delaer's finance manager actually said) and that could cause them to lose their franchise. The NJ DMV has opened an investigation against this desler over this issue as well since they expect any NJ new car dealer to provide the purchaser with the MCO. The dealership finally realized that I was in fact correct about not having to pay them the sales tax and they are issuing me a NJ title stamped sales tax not paid which will be accepted by the NY DMV. What turned out to be a positive experience with this dealership has now given me second thoughts about them.

peteypauls

Hi guys. Great forum here, so I figured I would post a question that nobody can seem to answer. I leased an Infiniti M35 in October, 2 year lease, in NY. Paid the taxes on my monthly payments upfront, which is done here. Due to all of the flooding, my car was totaled in July. I know insurance will pay out the lease payments, but do I receive any portion of the upfront taxes back? If so, would that be through Infiniti, the State of NY or my insurance company?

On a side note, my insurance company told me that in NY there is no General Sales Tax on a lease and tried telling me that any "tax" was put on by the dealer. If there's one thing I know, is that there is a tax on everything in NY.
Any help is appreciated, especially now since this should be settled soon. Thank you in advance.

joel0622

Normally in an insurance replacement you are reimbursed the taxes paid at time of sale. I cannot say that will be the case here because of two things.

If this event was to happen here where I live then I would be confident in telling you that it is the insurance agencies responsibility to pay you the taxes because you will be required to pay them again when you replace the total loss.

1. Lease

2. New York

j_ing

I was wondering if anyone on here knew what you pay sales tax on when leasing a car in New York. I checked their DMV and Taxation and Finance websites and found nothing. Do I pay sales tax on the sale price of the car, just on the depreciation during the leased term, the monthly payments? Thanks!

joel0622

The guy 2 post before yours said

I leased an Infiniti M35 in October, 2 year lease, in NY. Paid the taxes on my monthly payments upfront, which is done here.

j_ing

Thanks! I didn't even read that post.

peteypauls

Thanks for the quick response Joel. I found a lot of info on purchased cars, but not leases. Infiniti told me I was owed this money and that the insurance should pay it. On a side note, I ended up finding a court case out here a couple of years ago regarding this. The person who leased the car won and received the amount back from NYS tax division. I actually called the judge for that case, but he was not in. I hope this is something I wouldn't have to go to court about.

sjmp

Do you pay the sales tax on the MSRP of the vehicle or the price you actually pay for it. IF I get a car for 24k and the msrp is 29k - what do I pay tax on?

Also does anyone know the Sales Tax for living in Westchester County NY - I would be buying the car in NJ... Still confused after reading these posts.

Thanks,

joel0622

Call the number for the state you have questions about. They will either have the info or point you in the right direction to get it.

ALABAMA 334-242-9000
ALASKA 907-269-5551
ARIZONA 602-269-5551
CALIFORNIA 800-777-0133
COLORADO 303-205-5607
CONNETICUT 860-263-5700
DELAWARE 302-744-2502
DC 202-727-5000
FLORIDA 850-922-9000
GEORGIA 404-362-6500
HAWAII 808-532-7700
IDAHO 208-333-8663
ILLINOIS 217-785-3000
INDIANA 317-233-6000
IOWA 515-237-3110
KANSAS 785-296-3621
KENTUCKY 502-564-2737
LOUISINA 212-925-6146
MAINE 207-624-9000
MARYLAND 301-729-4550
MASSACHU 617-351-4500
MICHIGAN 517-322-1460
MINNESOTA 651-296-6911
MISSISSIPI 601-923-7141
MISSOURI 573-751-4509
MONTANA 406-846-6000
NEBRASKA 402-471-3918
NEVADA 775-684-4368
NEW HAMP 6603-271-2251
NEW JERSEY 609-292-6500
NEW MEXICO 505-827-0700
NEW YORK 518-486-4714
N CAROLINA 919-715-7000
N DAKOTA 701-328-2725
OHIO 614-752-7671
OKLAHOMA 405-521-3221
OREGON 503-945-5000
PENNSYLVANIA717-391-6190
RHODE ISLAND401-588-3020
S CAROLINA 803-737-4000
S DAKOTA 605-773-3541
TENNESSEE 615-741-3101
TEXAS 512-465-7911
UTAH 800-368-8824
VERMONT 802-828-2000
VIRGINIA 804-367-0538
WASHINGTON 360-902-3770
W VIRGINIA 304-558-3900
WISCONSIN 608-266-1466
WYOMING 307-777-4709

yankiwski

I'm looking to buy a used car from a dealer in NY - I live in NJ - and the dealer included a 7% sales tax (the current rate in NJ) on the bill of sale. Is this a valid sales tax, or is it going straight to the dealer's pocket?

Will I be taxed 7% again in NJ when I register the car, or will NJ credit the amount since it is listed on the bill of sale?

Should I refuse to complete the purchase with this charge included?

Thanks!

cccompson

Yes.

No.

You'll get credit.

No.

Also, see post #650 (above).

lizvb09

The dealer that I bought the car from agreed to secure my registration and title. I paid a $299 fee for processing so I assumed this would be done correctly. My mistake. I live in Washington DC. They took a copy of my license, insurance card, and my address was written three times during the sale. I did not co sign with anyone. The dealer charged me VA state sales tax and now I have another 450 bucks to pay them. Do I have to pay them? No where on the bill of sale does it say that there is VA tax on car. If I do have to pay the tax, do I have to pay the processing fee because it was processed incorrectly? I paid for the car in full with a check that has already cleared. It has been over 14 days.

HELP!!

qbrozen

huh?? did you pay sales tax when you bought the car or not? if not, what makes you think you don't have to? If you don't like it, then ask for the processing fee to be returned to you and you can then go down to the DMV yourself to pay for the registration, title transfer fee, and sales tax.

lizvb09

Yes I paid VA sales tax. I recognize that I have to pay tax and I am willing to do so. What is frustrating is that the "out the door" price that I was quoted and paid (including tax, tags, and all that) is not enough. The dealership called me today to tell me that I had to pay the extra tax even though it was there mistake to charge me the wrong tax. Shouldn't they have to eat the tax since it is already done and paid for? Again, it is not that I am against paying taxes that are due, but I was given an "out the door" price, including tax and registration with the understanding it would be DC tax and registration.

jipster

If you were quoted an "Out the Door" price, then that is all you should pay. Go tell the dealership to pound salt.(ref. gg)

tidester

If you were quoted an "Out the Door" price, then that is all you should pay.

I don't think that principle would apply here. The sales tax is the buyer's obligation and it is only a courtesy that a dealer transfers funds to the state on the buyer's behalf.

tidester, host
SUVs and Smart Shopper

oldfarmer50

"...The sales tax is the buyer's obligation..."

True. But didn't the poster say he lives in DC? Regardless of where he bought the car shouldn't he pay the DC tax only? Unless I'm misunderstanding this it seems funny that the dealer is trying to charge VA tax.

lizvb09

The dealer charged me the wrong tax with full knowledge that I lived in DC and was registering in DC. It was a dealer mistake to charge the wrong tax and complete the sale. What about processing fee, do you think I should have to pay that?

jipster

If you were incorrectly charged VA tax, then the dealership should return that money to you. Then you can pay the dealership the DC tax. Or, if DC tax is higher... pay the difference.

You've already agreed to the processing fee with your OTD offer. That the dealership processed part of the transaction incorrectly doesn't entitle you to all of the money back. But, the dealership should correct their mistake. This seems like a simple matter the dealership should be able to handle. :confuse:

edited: o.k...if the dealership is charging you more because they charged you VA tax when they should have been charging you DC tax (which is higher)... then that is their problem. Your OTD price was accepted by the dealership. They need to move the money around to account for the extra in tax. Their loss... tell them to pound salt.

Don't know if this was the dealerships intent,maybe they are just incompetent, but a nice scam to get people to pay more for a car than they intended. Pull the old, "OOPS we made a boo boo".

qbrozen

I just can't agree here. You know the tax you should be paying. I say pay it.

They DO have restitution in this case, I believe, and that is what I said before about refunding your taxes and reg fees and let you do it yourself.

Think of it this way, since you didn't catch the mistake yourself, what would happen if it was the opposite and they charged you too much tax? What would you do? Let them have it because you guys agreed to an OTD price and that's that? I have a very strong suspicion you would want that money refunded.

volvomax

most states issue a credit for taxes paid in other states.
so, if the tax in VA is less,and you buy the car in VA you pay the VA tax,and then pay the difference to the District.
DC however,doesn't issue such a credit.
So, depending on the state,the dealer should have collected either no tax at all and had the customer pay DC directly,or collected the DC rate.
Now,when a deal is being worked,the tax and fees are part of the computer program,so no one really looks at it too hard.
Obviously,no one told the desk manager that this person resided in DC,and the F&I dept didn't catch it either.
Mistakes do happen.
Taxes are not the dealers responsibility,they are the buyers.
Bottom line,the buyer owes exactly what they should owe.

jipster

the tax and fees are a part of the computer program, so no one really looks at it too hard.

They would if they were doing their job properly. The desk manager and F & I had buyers lisence copied and paperwork in front of them.

Mistakes do happen

Sure they do... so do scams. Hard to say which applys here. Either way I wouldn't be returning to this dealership.

Taxes are not the dealers responsibility.

They are when an out the door price is agreed on.

qbrozen

good to know you would let the dealer keep the extra money if they overcharged you by mistake, jipster.

nj2pa2nc

if the dealer charges more sales tax than needed (by mistake) they should be able to keep it since it is part of the OTD price. it goes both ways- if they overcharge they should refund and if they undercharge than the customer should pay it.

jipster

if the dealer charges more sales tax than needed (by mistake) they should be able to keep it since it is part of the OTD price.

That's exactly right. An Out the Door price includes taxes, fees, lisence... and oh, the price of the car.

I think some people, namely the dealership in question, are a bit unclear on what an OTD price actually means.

volvomax

They are when an out the door price is agreed on.

Actually,they are not.
standard language in any purchase order is a phrase stating that the dealer is not responsible for state and/or federal taxes and fees.
the fees are only estimated,and it is the buyers responsibility to pay them.

jipster

Actually, they are not.

Do you do that to your customers? Agree to an OTD offer, then tell them, "oh... of course you'll need to pay taxes and fees on top of the OTD price".

I sure wouldn't buy a car from someone who tried to pull a stunt like that.

When a customer and dealer agree to an OTD price (look up the definition in Edmunds), it then becomes the dealerships responsibility to fill out the purchase order in the appropriate manner. Of course, the buyer should check for the dreaded "human error" that is not as rare as it should be.

nj2pa2nc

when I bought my acura the OTD price with the dealer did not include taxes or registration fees. I knew that as the dealer is in Pa and I live in NC. when i registered the car I then paid those fees.