I'm about to a porsche from a private party. Since this is a private transaction and I am required to pay sales tax on the "actual" purchase price I wanted to ask what others had done.

I have been told by that one could transfer the title as "a gift" to avoid sales tax on the car. Alternatively, one could simply state a significantly lower value.

Has anyone ever transferred a title as a gift? If not, are there any disadvantages to stating a lower purchase price?

 

Only if you consider committing fraud a bad thing.

 

Dont do it, it's NOT worth it.

 

pretty much sure that most states have that 'gift' technique figured out. not sure about Cali, although . in illinois, it is a straight $1500 tax on private car transactions, not bad considering cost of my car...

if you can beat the taxes in any way, i say go for it though... The first owner paid the sales tax on it already--that is double taxation if you have to pay it again (work with me here

 

Years ago I had purchased a used car from a private party that was barely running. It needed a couple thousand dollars of work, so I basically got it for about half of what it was worth on paper. When I titled the car I listed the purchase price and paid tax on that amount. About 6 months later I got a letter from DMV saying that I owed taxes on the difference of what I paid versus the book value. I had to send a letter proving that the vehicle was in bad condition and that I needed to invest X amount in order for it to be roadworthy. At the end of the day, they dismissed the "bill" for what they claimed I owed.

Moral of the story. There are ways around it...but make no mistake, when it comes to taxation...it will eventually pop up on the radar and you'll either have to pay, or come up with a legitimate reason why you don't. Uncle Sam is always watching..lol.

 

When it comes down to it, I will pay the sales tax on the full sales price, if only for the specter of fraud and the legal issues. In this economy I am certain the government will come after anyone who tries to skirt paying a lower rate.

Still, it is infuriating that a car continues to get taxed heavily after each transfer of ownership.

 

In MA (and I suspect it is same for most states) DMV tax rule is very simple - they open up KBB and take value of your car from there, if private sales price is higher - they use higher price, if it is lower than KBB price (or gift) they use KBB price.

And you will have to present sales contract to DMV to get your car registered BTW. Gift or not you still pay taxes on your car. If you do not want to pay any taxes at all - become a billionaire then - they have their own ways. But we poor folk do have to pay our taxes no matter what.

 

The DMV asked me twice what I paid and then told me it was a great deal. I had all the paper work to prove what I paid so they let it go. Be aware that in California the seller sends in a form that states the selling price along with the buyer's name.

 

IN CA it's called a usage tax instead of sales tax on private sales, and if your stated price is too far off they just assign KBB Value.

 

The last time I 'gifted' a vehicle I did so legitimately (to my sister in California), and there was only a very small transfer fee to the CA DMV. From what I remember from the paperwork, this only applied because she was one of a small group of very close family members (sibling, parent, spouse, grandparent). It's very limited, as I sold a car to a cousin in California and remembered that it didn't qualify for tax exemption.

I'd just pay the tax and move on with a great new car and peace of mind.

 

Maybe Georgia is different. I sold a car to a cousin and bought a couple cars from private sellers without any tax involved. I was under the impression that private seller sales weren't taxed. Maybe I'm wrong

 

Used cars sold between private parties should be like any other used good...untaxed. There are many reasons they can get away with it, and the biggest one is that they control the licensing of the vehicle. Anything that requires a gov't license is a prime target for taxation/revenue generation.

In the state of Washington the tax is 10%, which is enough to deter me from buying cars. Not that the legislators will ever lose sleep over folks like me. To them its a trade off between revenue stream vs. stifling commerce, and bottom line its a tax that affects so few that there will never be political benefit to getting rid of it.

 

Nebraska is simple....whatever you put for the purchase price is the amount they use for the value. period. Of course, you want to be somewhat believable with your pricing, or if you state a significantly lower price than book, just write in the agreement that is was purchased AS IS with engine and/or transmission issues known by purchaser at time of purchase.

 

In Cali, if you state lower price at DMV then something happen to the car (totalled?), will insurance company just pay what you reported to DMV minus depreciation since DMV date?

 

Bottom line for many states, is they tax it because they can. And the greedy big-spending politicians in California aren't going to let go of that huge revenue stream.

California is one of the most predatory tax collecting states, and yet the state STILL has huge annual budget deficits in the tens of billions of dollars. Great governance eh? Imagine how much is being collected in taxes in a state with the highest number of cars, considering that they are all taxed at full sale value every time they are re-sold.

To the OP, I agree with the recommendations to just pay the freekin tax and move on. Just make sure that the sale value on your paperwork matches what the seller submits to DMV.