DMV Thread... bought a car from my neighbor below market value...

[Al Neri]

NB NY DMV

My neighbor sold me his old car (a 97 maxima) for $1,000.00 the kbb value on the car is approx. $6,100.00.

I'm in the process of filling out the DMV forms and I noticed that he has to fill out a form that states that he sold it for such and such price for me to pay the taxes on the lesser amount. Does the DMV ever say, no, you have to pay the tax on the full amount or am I safe to say I will pay the taxes on the $1,000.00?

also can someone explain the bold:

*Purchase price note: If the purchase price is lower than current market value as determined by the Tax Department, the seller must complete the back of
this form in order for you to pay tax on the lower amount. If for any reason you must obtain a registration or title before you can establish the amount of tax
due, you may obtain tax clearance by paying the tax due based on the market value as established by the Tax Department. If this results in an overpayment,
you may apply to the Tax Department for a refund or credit of the amount overpaid.

Thanks,

Don

 

[Ctrackstar126]

Ive always paid taxes on the price I paid not the price it books for in NY.

 

[Sentrosi2121]

I'll be printing out your title soon Don. I don't work for the DMV, but the Office for Technology. My wife used to have an aunt who worked for the DMV, but she moved over to the Comptrollers office, else I'd put you in touch with her.

 

[edro]

That is the oldest trick in the book.

If you buy a Clearance item at a store, do you pay sales tax on it's value, or on it's sale price?

$1,000 is fine. Hell, I would make it $100.

To me, the Bold part means if you need a title or registration before the purchase price is arranged. You already have a purchase price ($1,000).


And to all you "do gooders"... I feel absolutely no guilt by doing this.
Automobiles are one of the only sales that require you to pay tax when transferred between two private parties.
If you sell me a taco, I don't have to pay tax.
Cars shouldn't be any different.

 

[digiram]

Have your neighbor fill out a form that states that you paid 20.00 for it.

 

[jtvang125]

Say it was a gift and pay no taxes at all.

 

[middlehead]

Originally posted by: edro
$1,000 is fine. Hell, I would make it $100.

Yep. Last time I bought a car private-sale, I paid 1500 but we agreed to write down 100.

 

[pravi333]

NJ DMV didnt check the kbb value or anything, they just taxed the amount i put in the form & submitted a self written sales deed signed by both buyer & seller. Make sure you register with the right mileage though otherwise it'll show up in carfax as a negative point.

 

[waggy]

some areas have a min tax. also if it looks wrong they will look it up and charge you the correct tax.

 

[DrPizza]

NY is merely trying to slow down the amount of tax fraud. No matter what anyone does, as far as fraud, the state is going to spend X amount of dollars and need to raise X amount of dollars in taxes. If they don't get their money from one source, they'll get it from another. Thus, it penalizes the honest people when other people commit a fraud to lower their own tax burden.

If the amount you paid for the car is "reasonable", you won't have any problem with the DMV. Kinda hard to tell if $1000 is going to slide by if the car has a KBB value of 6k. Don't forget, the KBB is the average selling price, not the minimum that the NYDMV thinks its value is. But, in the past, there were tons of people who "paid" $500 (or less) for a car that books for $10,000 or more. Forcing the seller to complete a DMV form (where, IIRC, they're greeted with some soft of phrase that includes "to the best of your knowledge" and "fraud", etc. in it) reduces a lot of the problems that they have.

Lets be honest, suppose you sell a car for $10k to a total stranger on craigslist. At the time of sale, you agree to give him a bogus receipt that says $500 so he can save on taxes. Two days later, he comes back to you with a form from the DMV that you have to fill out, with a little threat at the bottom of prosecution for intentionally inaccurate statements. What are you going to do? Lie and risk punishment (with no clue what the odds are that you'll get caught) for a total stranger? Screw that. "Sorry, I can't take that big of a risk. How about I make out the official receipt for $9k?"

 

[ViviTheMage]

if I buy a car for 5k used, I will say I paid 4k ... I am bad

 

[alkemyst]

Originally posted by: edro
That is the oldest trick in the book.

If you buy a Clearance item at a store, do you pay sales tax on it's value, or on it's sale price?

$1,000 is fine. Hell, I would make it $100.

To me, the Bold part means if you need a title or registration before the purchase price is arranged. You already have a purchase price ($1,000).


And to all you "do gooders"... I feel absolutely no guilt by doing this.
Automobiles are one of the only sales that require you to pay tax when transferred between two private parties.
If you sell me a taco, I don't have to pay tax.
Cars shouldn't be any different.

Actually if I were to sell you a taco, I would be technically required to report that against my income taxes.

Cars aren't the only item...houses, property and other vessels fall under that rule.

You can't make your own intrepretation of the law unfortunately.

 

[amdskip]

On the books I paid $100 for my old camaro.

 

[markgm]

You're lucky. In CT they don't care what you paid for the car, you pay taxes on what it's worth, unless you paid more than it's worth, then you pay taxes on that amount.

 

[everman]

I think you should be able to consider it a gift. Any person in any state can gift anyone up to $12,000 with no tax consequences for anyone.

 

[alkemyst]

Originally posted by: everman
I think you should be able to consider it a gift. Any person in any state can gift anyone up to $12,000 with no tax consequences for anyone.

Still fraud if money actually changed hands.

You are correct about gifts though, you can gift $12000 tax free to any number of people. A common misconception though is that you can then reduce your income by $12,000.

Accepting cash for an item 'gifted' is a major issue to the IRS and tax collectors. Keep in mind if they were to conduct an audit they could easily see both parties had similar amounts withdrawn/deposited between them most of the time.

Chances of an audit though at this level are about nil.

 

[Dunbar]

Originally posted by: markgm
You're lucky. In CT they don't care what you paid for the car, you pay taxes on what it's worth, unless you paid more than it's worth, then you pay taxes on that amount.

It would seem kind of hard to put a value on a 11-year old Maxima without them seeing it. If it's in rough shape it could be worth significantly less than blue-book value (which is already inflated). But it is true that many states have specific tax schedules for used cars that are not simply "x" percentage of the selling price.

 

[alkemyst]

true...what they are looking at much of the time is a 6k mile 2005 Ferrari going for $1000 to someone. Even if Joe Redneck fudged his $3k Camero for $200, they are only losing a couple hundred bucks.

 

[akshatp]

My wife moved to NJ from MI last year, and when we transferred the title the dumb a$$ CSR at the DMV insisted on us having to pay tax. I couldnt explain enough that NO SALE is taking place yet she just wouldnt budge on her stance. Not until I spoke to someone else there with half a brain who explained that we should just leave the sale price blank and not pay any tax.

You would think someone who has a job working at the DMV would know a little bit about transferring a title from state to state. Gotta love bureaucracy

 

[mugs]

Originally posted by: akshatp
My wife moved to NJ from MI last year, and when we transferred the title the dumb a$$ CSR at the DMV insisted on us having to pay tax. I couldnt explain enough that NO SALE is taking place yet she just wouldnt budge on her stance. Not until I spoke to someone else there with half a brain who explained that we should just leave the sale price blank and not pay any tax.

You would think someone who has a job working at the DMV would know a little bit about transferring a title from state to state. Gotta love bureaucracy

I believe some states require you to pay the sales tax, or at least the difference between the sales tax in state A and state B when moving from state A to state B, even though you've already paid the tax on the car and have owned it for some period of time.

NJ is not one of those states: http://www.state.nj.us/mvc/Veh...sidentTransferring.htm

 

[bctbct]

Originally posted by: markgm
You're lucky. In CT they don't care what you paid for the car, you pay taxes on what it's worth, unless you paid more than it's worth, then you pay taxes on that amount.

They tried that here in KS for a while but I believe a court overturned it.