CALI - Tax On Used Car - How Does This Work?

[Kenji4861]

I have a few questions regarding buying an used car.

1. If I buy from a private seller, who do I pay tax the tax fee to? Do I pay at DMV or to the seller?


2. If I do buy from a private seller for $20,000, can he write me up for $10,000 so I don't have to pay as much tax?

3. Do I pay tax if I buy an used car out of state and drive it back?

Thanks in advance.

 

[SCSIRAID]

The tax is usually collected when you register the car (transfer the title and get a plate).

 

[bsobel]

1. If I buy from a private seller, who do I pay tax the tax fee to? Do I pay at DMV or to the seller?

You pay at the DMV when you register the vehicle.

2. If I do buy from a private seller for $20,000, can he write me up for $10,000 so I don't have to pay as much tax?

Yes, this is known as fraud and you can go to prison for it.

3. Do I pay tax if I buy an used car out of state and drive it back?

Yes.

Bill

 

[thedarkwolf]

I really doubt they would send him to jail for lying about what he paid for the car. If they did I know lots of people that would be in prison including myself. Just don't do something crazy like write down $1k for a $20k car.

 

[bsobel]

Originally posted by: thedarkwolf
I really doubt they would send him to jail for lying about what he paid for the car. If they did I know lots of people that would be in prison including myself. Just don't do something crazy like write down $1k for a $20k car.

I said 'can go', not 'will go'. It's still tax fraud.
Bill

 

[Kenji4861]

Thanks guys. In other car forums, I've been getting statements like thedarkwolf. Sellers would usually write off 1/3 of what they got so the buyer won't have to pay as much on tax. Will keep in mind that it's a fraud. Man, I've been told twice what this year already that what I'm thinking of doing is tax fraud (shaking head).

 

[Kelemvor]

Originally posted by: Kenji4861
I have a few questions regarding buying an used car.

1. If I buy from a private seller, who do I pay tax the tax fee to? Do I pay at DMV or to the seller?

You write it on the titel and pay when you Register the car and get new plates and such

2. If I do buy from a private seller for $20,000, can he write me up for $10,000 so I don't have to pay as much tax?

Sure if you want to chance going to jail. It's illegal and if you get caught you will pay a lot more than you'd just pay if you did it right in the first place. And YES they do check up on sales when the written down number doesn't jive with the actual value of the car.

3. Do I pay tax if I buy an used car out of state and drive it back?

Yes, you still pay when you register it but I'm not sure how that works as far as sales tax.

 

[YingYang]

2. If I do buy from a private seller for $20,000, can he write me up for $10,000 so I don't have to pay as much tax?

Forget about the Fraud part. What happens if you get in a car accident and your insurance company looks at your tags and it says you paid $10K for your car? Sounds like you're taking your chances.

 

[dethman]

hooray for tax fraud. stick to to the MAN!

 

[Yossarian]

Originally posted by: YingYang
2. If I do buy from a private seller for $20,000, can he write me up for $10,000 so I don't have to pay as much tax?

Forget about the Fraud part. What happens if you get in a car accident and your insurance company looks at your tags and it says you paid $10K for your car? Sounds like you're taking your chances.

that isn't a factor.

 

[Toasthead]

As far as I know CA charges you tax based on the KB value of the car...not the actual, or should i say , 'repoted' sale price... They arent idiots.

 

[rahvin]

Originally posted by: thedarkwolf
I really doubt they would send him to jail for lying about what he paid for the car. If they did I know lots of people that would be in prison including myself. Just don't do something crazy like write down $1k for a $20k car.

How about a 15k car for $1? Been there done that.

 

[iamwiz82]

Originally posted by: thedarkwolf
I really doubt they would send him to jail for lying about what he paid for the car. If they did I know lots of people that would be in prison including myself. Just don't do something crazy like write down $1k for a $20k car.

In Michigan, if the value of the car seems odd, they will make you pay taxes on the FMV.

True story: a person I know was given $50 to remove a mid-70s Chevy pickup from a friends house, because it was god-awful to look at. Now, this guy fixed it up and got it running, so he went to register it and put down $1 as the value, since it really isn't worth anything. When he went to the SoS, they rejected his $1 claim and asked him how much he actually paid for the vehicle. He stated that he was given $50 to take it, and wondered if the State of Michigan was going to give him back $3 back (6% tax here). They let him put $1 on the registration

 

[DurocShark]

Originally posted by: FrankyJunior

3. Do I pay tax if I buy an used car out of state and drive it back?

Yes, you still pay when you register it but I'm not sure how that works as far as sales tax.

Cali calls it a "Use Tax".

In fact, you're legally required to pay use tax on ANYTHING you purchase via mail order or the internet that you didn't pay sales tax on.