Car trading and registration taxes?
07-30-08, 11:47 PM
#1
Lexus Champion
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Car trading and registration taxes?
Okay guys so I have never traded cars with someone before but i'm about to. I live in WA state and I was wondering how I go about paying taxes when I try to register it. It's not there was any type of sale that went on. Do I still have to pay taxes on the value of the car?
Thanks,
Elliott
Thanks,
Elliott
07-31-08, 09:16 AM
#2
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Let me first say that I'm not in Washington state. This is just what I found online:
If you trade cars you may be subject to a use tax, even if it is an even trade.
http://www.dmv.org/wa-washington/buy...lling-faqs.php
However, if you each gift the vehicle to the other person, you should be able to get around the use tax and sales tax. I would check with the DMV to confirm this!
http://www.dmv.org/wa-washington/title-transfers.php
Good luck,
JP
If you trade cars you may be subject to a use tax, even if it is an even trade.
Originally Posted by DMV.org
Please explain to me Washington's use tax?
A use tax is charged in the absence of a sales tax. For example, when you purchase a used vehicle from an individual, there is no sales tax involved, so the state instead charges a use tax. But unlike a sales tax, which is based on purchase price, a use tax is based on a vehicle's fair market value.
In regards to the use tax, how is a vehicle's fair market value determined?
The Department of Licensing (DOL) relies upon National Market Reports (NMR) for determing fair market value.
Can I challenge the determined fair market value, if I'm convinced my vehicle is worth less?
Sure. To do so, provide the DOL with one or more of the following:
* An estimate in repairs as determined by a mechanic. You can't guess this on your own. You must employ a certified mechanic to create the estimate.
* An appraisal authored by a registered dealer.
* Photocopied evidence of another maket value-setting source listing your vehicle at a lower value. Kelley Blue Book, Edmunds, and the National Auto Dealers Association (NADA) are all considered legitimate sources.
* Submit a Declaration of Buyer and Seller Regarding Value of Used Vehicle Sold form.
A use tax is charged in the absence of a sales tax. For example, when you purchase a used vehicle from an individual, there is no sales tax involved, so the state instead charges a use tax. But unlike a sales tax, which is based on purchase price, a use tax is based on a vehicle's fair market value.
In regards to the use tax, how is a vehicle's fair market value determined?
The Department of Licensing (DOL) relies upon National Market Reports (NMR) for determing fair market value.
Can I challenge the determined fair market value, if I'm convinced my vehicle is worth less?
Sure. To do so, provide the DOL with one or more of the following:
* An estimate in repairs as determined by a mechanic. You can't guess this on your own. You must employ a certified mechanic to create the estimate.
* An appraisal authored by a registered dealer.
* Photocopied evidence of another maket value-setting source listing your vehicle at a lower value. Kelley Blue Book, Edmunds, and the National Auto Dealers Association (NADA) are all considered legitimate sources.
* Submit a Declaration of Buyer and Seller Regarding Value of Used Vehicle Sold form.
However, if you each gift the vehicle to the other person, you should be able to get around the use tax and sales tax. I would check with the DMV to confirm this!
Originally Posted by DMV.org
If you're giving a vehicle as a gift, you need to:
* Sign off on the title as if you're the seller.
* Include an odometer reading if the vehicle is 10 years old or newer.
* Provide verification that the vehicle's sales tax has been paid if you have owned the car less than seven years.
* Provide a "Letter of Gift" stating your intent along with the vehicle's description, the new owner's name, your signature, and the date.
The new owner must then take all of this evidence to the nearest vehicle licensing office and complete a Vehicle Certificate of Ownership Application.
* Sign off on the title as if you're the seller.
* Include an odometer reading if the vehicle is 10 years old or newer.
* Provide verification that the vehicle's sales tax has been paid if you have owned the car less than seven years.
* Provide a "Letter of Gift" stating your intent along with the vehicle's description, the new owner's name, your signature, and the date.
The new owner must then take all of this evidence to the nearest vehicle licensing office and complete a Vehicle Certificate of Ownership Application.
Good luck,
JP
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