I am thinking of buying an used TSX to save some cash.

I was wondering if I need to pay tax on an used TSX.

I was told that I need to, but something is not clear to me. I mean, the original owner already paid the tax for the car sales and if the car is resold.. the state gets tax on the car again?

If that is the case.. just from people selling the used car over and over.. the state can make more than the car's value. I understand, I need to pay the registration fee ($200 in CA).

Any info would be helpful. Thanks!

 

Yup. That's how it works with states that have sales tax.

Some states milk it more than others...

Conversely, some states do let the consumer benefit in a form of a tax credit if you trade-in a car to buy a new one. For example, here in IL, you will get tax credit by trading in a used car (you get credited whatever the tax is on the agreed trade-in value of your car) towards your purchase of a new one. Not sure which other states allow this.

 

From a comment in your post, looks like you're in California (as I am).

You will have to pay sales tax on the full sale price of the used car. If you buy it from a private party, when you register the car the California DMV will collect both the sales tax and the registration fee.

 

Yup.. It's damn weird that CA collects money for private party sale too. It sucks!~!! :sqntfawk:

 

I don't think the private used car sale tax only applies to CA. WA is the same way.

 

Of course you get taxed.

Think of it this way, wholesalers tax when they sale their products to retailers, and retailers have to tax the customers when they purchase the already taxed item.

 

It blows. Basically the rule is every time money changes hands, you owe tax. Of course there's always some exceptions, but that's generally true.

 

THanks guys, how about this.

What if, say I buy an used TSX from a private seller for $23k, but we work out something so it makes it look like.. he sold it to me for $10k, and I give him the $13k under the table. I would only be taxed for the $10k. I'm sure it's illegal, but would it work?

 

Depends on the state.

Washington state has a rule saying if the selling price of the car is too far below or above the book value, then they have the right to request an appraisal or audit.

This is generally for collector editions and really banged up cars.

 

I think Massachusetts has the same thing. You pay sales tax on the book value or the purchase price, whichever is higher.

 

Same deal in California...you pay sales tax on the current book value. It use to be you can do pretty much what ever with DMV...but no longer

 

Buy it in Oregon. No sales tax. HAHAHAHA

(Or New Hampshire, but that place sucks).

 

That's very true if you live in Oregon. I thought about doing that too and drive it back to WA. However, when you try to register the car in your own state, that's when they ding you with the sale tax.

 

Hehe...unless you maintain two residences. For example, you have a friend who lives in Oregon. You pay him $1/month in rent and claim that as your residence. Then you live in your "summer house" in WA. =)