Tax When Buying A Used Car?

Question

When you buy a used car that is privately owned and NOT from a dealer, do you still have to pay tax? My dad said something like for every $1000 the car cost you have to pay $80. The car I want is $15,000 and my dad said tax would be $2000. He said it's the only way to register the car, you have to pay tax. Is this true?

I live in California and tax is %8.25 I think.

Answer 1

It's partly true. The taxes differ from state to state.

I live in Michigan, and here we have to pay a 6% sales tax, so it would be $60 for every $1000 instead of $80. And, yes, it's on all vehicles sold, either used or new, dealer or private party, no matter the condition.

I bought a Geo Tracker for $3200, and it was private party (bought it from a local pastor, even), and I had to pay $192 for the sales tax, plus $117 for a license plate before I was allowed to drive the vehicle freely. So, total was $309. Plus, I had to have proof of insurance, which was $200 down at the insurance company plus $100 every month, though it's gone down since then because of my spotless driving record.

For your 8% tax ($80 for every $1000), and figuring plates are a similar price in your state, factor in about $1200 for the sales tax and at least $100 for lisence and registration (my plate was $117 because it was a personalized plate - regular plates were $97, and this was two years ago). This brings you to at least $1300, plus whatever insurance premium you have to pay, to get the car on the road after you've bought it.

I ran across the same stumbling block buying my Tracker, and had to let it sit in the yard for three months while I saved up the money for insurance, tax, and license/registration (of course, being semi-laid-off didn't help).

I hope this has answered your question. If you have any more, please feel free to ask.

Answer 2

Something sounds fishy right here. The credit score union won't cost you revenue tax for a mortgage. You are not shopping something from them. I do not know what state you reside in, however in my state, if the vehicle has been already bought and registered within the state, then whilst you purchase it, you're now not required to pay the tax once more. I recognize all states are specific, and you can also ought to pay the tax whilst you check in it on the DMV and the credit score union may have a lien at the name, however that do not have something to do with the tax. Make definite you fully grasp the whole thing, earlier than you signal the papers. Read the high-quality print and do not be embarrassed approximately taking the time to learn the stuff. You are signing the agreement, so recognize what you're signing.

Answer 3

Depends on where you live. In Massachusetts you have to pay a sales tax to the RMV of $5 per $1000.
On private sales they use the NADA retail book to establish the price, usually higher than the price you paid.
State's sales taxes vary from 1% to 8%.
If you have an 8% sales tax your dad is correct except for the math. 8% of $15,000 is $1200.