Taxes on private car trading ?

ho1ming · 08-09-2009, 01:22 AM

Saw a lot of for trade posts but I have never done it before. Now I am about to trade my BMW with another guy whose car has a lower value than mine. My question is do we need to pay taxes on the values of both cars or we just pay difference? If we need to pay the full taxes, can we go the dealer and pay them a fee to create a "trade-in" (the dealer buy my car and the guy trade his car in for that)?

VTECaddict · 08-09-2009, 01:56 AM

Depends on state. In CA you have to pay tax on the full purchase price, regardless of trade or not, private party or dealer.

Check your state's DMV website.

sokdo · 08-09-2009, 03:56 AM

Is tax applicable for private party trades? I thought they were exempt due to non monetary transactions taking place...

JmanND · 08-09-2009, 10:52 AM

Quote:

Originally Posted by sokdo

Is tax applicable for private party trades? I thought they were exempt due to non monetary transactions taking place...

You're confusing tax law. Non-monetary transactions (like kind exchanges) is federal tax law and that applies to the recognition (or rather the lack thereof) of income to the extent of gains on qualifying property (aka, the value of the property is MORE than what you originally paid minus depreciation taken). Only for businesses.

The tax you'd pay for buying/trading vehicles is state tax law. My guess is that all states would require you to pay some sort of "sales tax" (even though its a barter transaction) for private party trades. They'll get you when you register the vehicle.

dale512 · 08-09-2009, 12:44 PM

I don't know about PA, but in CA, you pay taxes when you register...with one exception. If you are closely related, you do not have to pay taxes. There's a list of what constitutes close relationship in the Vehicle Code.

ElRedOne · 08-09-2009, 02:49 PM

How much lower in value? In PA you declare what you paid to the notary/tag company who collects the taxes. Agree beforehand that it is an "even swap". You might contact a notary before you do the transaction and inquire how they would handle, but perhaps not the one you intend to use.

Nikolas · 08-09-2009, 11:09 PM

Nevada does not charge sales tax on private party sales.

ho1ming · 08-10-2009, 12:57 AM

I checked and according to the PA DMV, sales tax apply to the difference between the trades (not sure if it is only for dealers), i ll check with local AAA offices tomorrow. Thanks guys!

ho1ming · 08-10-2009, 11:23 PM

the AAA lady told me it should be treated like too separate sales (sucks!) and we both have to pay taxes on the value of the cars that we are getting.....

DenverJayhawk · 08-11-2009, 09:07 AM

The sales tax is generally paid when registering the vehicle. The DMV will usually collect sales tax based on the sales price written on the back of the title.

So to avoid sales tax, write in $0 sales price on the back of each title when doing the trade.

08-09-2009, 01:22 AM	#1
ho1ming Private 3 Rep 78 Posts Drives: e92 328i Join Date: Apr 2009 Location: PITTSBURGH/Philadelphia PA iTrader: (0)	Taxes on private car trading ? Saw a lot of for trade posts but I have never done it before. Now I am about to trade my BMW with another guy whose car has a lower value than mine. My question is do we need to pay taxes on the values of both cars or we just pay difference? If we need to pay the full taxes, can we go the dealer and pay them a fee to create a "trade-in" (the dealer buy my car and the guy trade his car in for that)?
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08-09-2009, 01:56 AM	#2
VTECaddict Where'd my VTEC go? 481 Rep 6,067 Posts Drives: 06 330i 6MT Join Date: Mar 2009 Location: Seattle, WA iTrader: (4)	Depends on state. In CA you have to pay tax on the full purchase price, regardless of trade or not, private party or dealer. Check your state's DMV website. __________________ AW/Terra \| ZSP \| ZPP \| ZCW \| iDrive \| CA Mods: BC BR coilovers \| Blacklines \| M-tech rear \| dual exhaust \| M3 steering wheel \| BMW SSK \| ZHP shift knob \| High-kick CF spoiler \| NBT Retrofit M3 front control arms \| M3 rear guide rods \| Manzo rear toe and camber links \| Monroe rear shock mounts \| Varrstoen ES1 19x9.5+20 Front, 19x11+25 rear
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08-09-2009, 03:56 AM	#3
sokdo Lieutenant 50 Rep 582 Posts Drives: 335i E92 Join Date: Jul 2009 Location: Fullerton, CA iTrader: (0)	Is tax applicable for private party trades? I thought they were exempt due to non monetary transactions taking place...
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08-09-2009, 12:44 PM	#5
dale512 New Member 0 Rep 15 Posts Drives: 2006 330i Join Date: Aug 2008 Location: SF Bay Area iTrader: (0)	I don't know about PA, but in CA, you pay taxes when you register...with one exception. If you are closely related, you do not have to pay taxes. There's a list of what constitutes close relationship in the Vehicle Code.
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08-09-2009, 02:49 PM	#6
ElRedOne First Lieutenant 3 Rep 303 Posts Drives: '06 330xi, '06 Z4M Join Date: Oct 2007 Location: PA iTrader: (0)	How much lower in value? In PA you declare what you paid to the notary/tag company who collects the taxes. Agree beforehand that it is an "even swap". You might contact a notary before you do the transaction and inquire how they would handle, but perhaps not the one you intend to use. __________________ ElRedOne 330 xi Electric Red/Beige Step-Premium-Sport-CW-CA-PDC-Shade Z4MR Interlagos/Black
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08-09-2009, 11:09 PM	#7
Nikolas Colonel 313 Rep 2,576 Posts Drives: 996 TT Join Date: Jul 2007 Location: Sierra Mountains iTrader: (0)	Nevada does not charge sales tax on private party sales.
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08-10-2009, 12:57 AM	#8
ho1ming Private 3 Rep 78 Posts Drives: e92 328i Join Date: Apr 2009 Location: PITTSBURGH/Philadelphia PA iTrader: (0)	I checked and according to the PA DMV, sales tax apply to the difference between the trades (not sure if it is only for dealers), i ll check with local AAA offices tomorrow. Thanks guys!
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08-10-2009, 11:23 PM	#9
ho1ming Private 3 Rep 78 Posts Drives: e92 328i Join Date: Apr 2009 Location: PITTSBURGH/Philadelphia PA iTrader: (0)	the AAA lady told me it should be treated like too separate sales (sucks!) and we both have to pay taxes on the value of the cars that we are getting.....
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08-11-2009, 09:07 AM	#10
DenverJayhawk Major 72 Rep 1,217 Posts Drives: 2006 E90 330i Join Date: Jul 2008 Location: Denver iTrader: (0)	The sales tax is generally paid when registering the vehicle. The DMV will usually collect sales tax based on the sales price written on the back of the title. So to avoid sales tax, write in $0 sales price on the back of each title when doing the trade. __________________ 330i, Black Sapphire, 6MT, Sport, Active Steering, Flux Capacitor
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