Sales tax on used cars - LotusTalk - The Lotus Cars Community
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post #1 of 90 (permalink) Old 07-24-2007, 01:07 AM Thread Starter
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Sales tax on used cars

In September 2007 my wife and me will be moving from Amsterdam to New York City for our jobs.
One the big (maybe the biggest!) advantages of this move is that buying a Lotus Elise now comes much more in our financial reach (price of a new base-Elise in the Netherlands: USD 85K including VAT. Price of options is at least double the US-price).

Iíll probably will start looking for a used Elise and I have a question regarding sales tax on used cars because the US sales tax system is very different from the Dutch VAT-system.

I know that prices of cars on the websites of car dealers exclude sales tax, so a car advertised for 40K will cost me an additional 3.2K (assuming 8%) sales tax which I need to pay in the state where I live (NY). But if I buy a used car from an individual seller, do I also need to pay sales tax or is there an exemption?

I could not find the answer in other threads on this forum, I hope you can answer this for me.

Thanks!
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post #2 of 90 (permalink) Old 07-24-2007, 02:41 AM
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Quote:
Originally Posted by E.D.
In September 2007 my wife and me will be moving from Amsterdam to New York City for our jobs.
One the big (maybe the biggest!) advantages of this move is that buying a Lotus Elise now comes much more in our financial reach (price of a new base-Elise in the Netherlands: USD 85K including VAT. Price of options is at least double the US-price).

Iíll probably will start looking for a used Elise and I have a question regarding sales tax on used cars because the US sales tax system is very different from the Dutch VAT-system.

I know that prices of cars on the websites of car dealers exclude sales tax, so a car advertised for 40K will cost me an additional 3.2K (assuming 8%) sales tax which I need to pay in the state where I live (NY). But if I buy a used car from an individual seller, do I also need to pay sales tax or is there an exemption?

I could not find the answer in other threads on this forum, I hope you can answer this for me.

Thanks!
You still need to pay sales tax when you go to register the vehicle. The only advantage is that you tell them the amount that you paid.

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post #3 of 90 (permalink) Old 07-24-2007, 04:28 AM
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When I bought my Exige, I had no idea I had to pay Sales Tax haha. I thought I was getting a $65 tax, and the lady was like, "That'll be $3,467". <-- That was me.
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post #4 of 90 (permalink) Old 07-24-2007, 05:05 AM
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Many states (including if I read the NY DMV regs correctly) will credit payment of a sales tax if you can document you paid it elsewhere (e.g., if you paid a VAT in Europe - not clear whether you were considering this from your post). Whether they will consider a VAT a sales tax is probably up for debate.

If you buy in the US, you'll probably end up having to pay the sales tax at registration, as already mentioned, regardless of who sells it to you.

FWIW, given the magnitude of the VAT, you're probably still better off purchasing in the US.

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post #5 of 90 (permalink) Old 07-24-2007, 05:12 AM
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Quote:
Originally Posted by EdHahn
Many states (including if I read the NY DMV regs correctly) will credit payment of a sales tax if you can document you paid it elsewhere (e.g., if you paid a VAT in Europe - not clear whether you were considering this from your post). Whether they will consider a VAT a sales tax is probably up for debate.

If you buy in the US, you'll probably end up having to pay the sales tax at registration, as already mentioned, regardless of who sells it to you.

FWIW, given the magnitude of the VAT, you're probably still better off purchasing in the US.

ed
It's pretty clear that he is buying the car in the US. You will certainly have to pay tax no matter how you slice it and while you can have the seller put a lower price on the bill of sale you will likely then be forced to pay the tax based on the blue book value of the car vs. stated value. Most states do this.
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post #6 of 90 (permalink) Old 07-24-2007, 05:26 AM
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Originally Posted by KingOfJericho
It's pretty clear that he is buying the car in the US. You will certainly have to pay tax no matter how you slice it and while you can have the seller put a lower price on the bill of sale you will likely then be forced to pay the tax based on the blue book value of the car vs. stated value. Most states do this.
Of course you bought it with a damaged front clam, so it was $12,000 cheaper and you did the repairs yourself so there's no receipt from an autobody shop.

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post #7 of 90 (permalink) Old 07-24-2007, 05:35 AM
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Quote:
Originally Posted by E.D.
In September 2007 my wife and me will be moving from Amsterdam to New York City for our jobs.
You are going to be driving and parking an Elise in NYC?
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post #8 of 90 (permalink) Old 07-24-2007, 05:38 AM
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Quote:
Originally Posted by E.D.
I know that prices of cars on the websites of car dealers exclude sales tax, so a car advertised for 40K will cost me an additional 3.2K (assuming 8%) sales tax which I need to pay in the state where I live (NY). But if I buy a used car from an individual seller, do I also need to pay sales tax or is there an exemption?
As others have said, you'll pay it when you register the car at the sales tax rate of the state in which you reside (assuming you are registering it there too).

Private parties are usually allowed some difference versus book rate to the amount listed on the title, but we're not talking a lot here. If you have specific questions and want to speak in Dutch about it, let me know (not me but a friend of mine who has been living here for around 8 years) and I can give you his e-mail address. He's from Rotterdam, so you may not want to. ;-)

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post #9 of 90 (permalink) Old 07-24-2007, 05:46 AM
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Originally Posted by KingOfJericho
you will likely then be forced to pay the tax based on the blue book value of the car vs. stated value.
What's the blue book value of our cars? Kelly Blue Book doesn't list Lotus. I'd argue for tax based on sales value since there is no listing with KBB.
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post #10 of 90 (permalink) Old 07-24-2007, 05:50 AM
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Originally Posted by RoadDad
What's the blue book value of our cars? Kelly Blue Book doesn't list Lotus. I'd argue for tax based on sales value since there is no listing with KBB.
I was saying that's how it typically works. I have not bought a used Lotus so I have no idea but typically this is the case. I doubt they would accept $5K as the sale price but knocking $5-10K off would probably slide under the radar.
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post #11 of 90 (permalink) Old 07-24-2007, 06:08 AM
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heh, expect to pay around $500/month to rent a parking spot in Manhattan

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post #12 of 90 (permalink) Old 07-24-2007, 07:01 AM
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Quote:
Originally Posted by KingOfJericho
I was saying that's how it typically works. I have not bought a used Lotus so I have no idea but typically this is the case. I doubt they would accept $5K as the sale price but knocking $5-10K off would probably slide under the radar.

I live in NY and have bought and sold many cars. You will pay whatever the rate is in your county of residence. Here it is 8.75. Erie County...Buffalo which is about 10 hour drive from your future home. Dont know what it is in NYC or the counties around there. I suspect it is about 8%$ plus.

If you pay sales tax in another state (which you wont if you buy it from out of state) they will credit you for that amount. I have never had to pay tax in another state when buying a car. You then pay it when you register. They do have a book that says what all cars are worth. (inlcuding Lotus) It is not worth the few dollars you will save to mess with NYS sales tax.

If you buy it from a NYS dealer...you pay the tax to the dealer.


Some states like GA do not charge sales tax on cars sold from private owners.

In MO...or is it Kansas....you get credit for a car you sold if it is within a certain time frame.

I think it sucks that they continue to collect sales tax on cars again and again. But the dealers lobbied for this as it would put dealers at a great disadvantage. Of course dealers dont pay sales tax on their cars. There was a push by NYS sales tax to charge dealers for the sales tax on the amount of the time/vehicle depreciation that they use on their demo cars. Dont know if that is still being done. But they still dont have to pay the full shot for the value of a car...even if you only use if for half of its life.

You should be able to get a credit for a used car sale if you buy another car within a year. Why should we pay full tax on something we sometimes dont get full value out of?

Tony Vaccaro
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post #13 of 90 (permalink) Old 07-24-2007, 07:04 AM
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Quote:
Originally Posted by 25psi_Elise_Killer
heh, expect to pay around $500/month to rent a parking spot in Manhattan

A LOONY...well he used to be a LOONY before we split up the state....owns a parking garage in Manhattan. Ken is his name and he has a few Lotus cars. Dont know where his garage is. West side i think.

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post #14 of 90 (permalink) Old 07-24-2007, 07:07 AM
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Quote:
Originally Posted by E.D.
In September 2007 my wife and me will be moving from Amsterdam to New York City for our jobs.
One the big (maybe the biggest!) advantages of this move is that buying a Lotus Elise now comes much more in our financial reach (price of a new base-Elise in the Netherlands: USD 85K including VAT. Price of options is at least double the US-price).

Iíll probably will start looking for a used Elise and I have a question regarding sales tax on used cars because the US sales tax system is very different from the Dutch VAT-system.

I know that prices of cars on the websites of car dealers exclude sales tax, so a car advertised for 40K will cost me an additional 3.2K (assuming 8%) sales tax which I need to pay in the state where I live (NY). But if I buy a used car from an individual seller, do I also need to pay sales tax or is there an exemption?

I could not find the answer in other threads on this forum, I hope you can answer this for me.

Thanks!
Just write the purchase price as 20K and pay tax based on it when you register the car under your name.
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post #15 of 90 (permalink) Old 07-24-2007, 07:20 AM
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Originally Posted by shokwaves
Just write the purchase price as 20K and pay tax based on it when you register the car under your name.
Can't be many places left where that trick works. They closed that loophole here in Washington a few years ago.
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post #16 of 90 (permalink) Old 07-24-2007, 07:31 AM
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Last edited by Brennon; 07-24-2007 at 01:41 PM.
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post #17 of 90 (permalink) Old 07-24-2007, 08:08 AM Thread Starter
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Quote:
Originally Posted by 25psi_Elise_Killer
heh, expect to pay around $500/month to rent a parking spot in Manhattan
Yes, I expect parking in NYC to be even a bigger/costlier problem than here in Amsterdam (I've got tons of experience of circling around for 30-45 minutes just to find a free parking spot). I' am aware of the problem, we'll see if I can work something out with my employer.

Thanks for answering my question, just one detail remaining: do I need to pay sales based on the original purchase price (which is on the title?) paid by the original owner who bought it as a new car, or is it based on the lower price I will pay for a used car?

The whole procedure is a good example what a good lobby can do: when I buy some used items from an individual (furniture or whatsoever): I don't pay sales tax (don't tell me you even need to pay sales tax for a transaction like this, how can the state ever know when these transactions happen?). But when I buy a used item and item just happens to be a car: sales tax! While the nature of the transaction is identical: individual buys used stuff from individual. Now we only need to wait for the furniture industry-lobby to wake up and to design some procedure in which we also need to pay sales tax on used furniture....
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post #18 of 90 (permalink) Old 07-24-2007, 08:22 AM
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Well, there is one difference--you probably won't be driving your used furniture on the roads so it does not have to be licensed by the state .
As for your other question, sales tax (registration fees) for used vehicles are always based on the "Bill-of-Sale" price agreed to by the two parties involved in the sale. If you buy a used car from a dealer, that dealer will often handle registration paperwork; reporting the sales price can be a little less formal when you deal with an individual-to-individual sale.

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post #19 of 90 (permalink) Old 07-24-2007, 09:00 AM
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Quote:
Originally Posted by shokwaves
Just write the purchase price as 20K and pay tax based on it when you register the car under your name.

If you claim what sales tax feels is a undervalued amount, they will either tell you to pay "their" value or send the seller a letter demanding to know the sales price under penalty of sales tax evasion.

Unless it is your brother or sister most wont take the chance for a total stranger.

Like I said...It is just not worth it.

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post #20 of 90 (permalink) Old 07-24-2007, 09:11 AM
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Tax laws vary from state to state. In Arizona, for example, there is no sales tax on vehicles in a private party transaction. However, as I understand it, if you live in California and buy a used car through a private transaction in Arizona, you'll end up paying a tax when you register the car in California. I'm not familiar with tax laws in other states.

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