Talk About Cars|A Discussion About Cars, Maintenance and Car Buying
Aug
14
Filed Under (Buying & Selling) by Dolores
Westport asked:
My mother in law has a Honda Accord and I have a BMW. I would like to give her the BMW and take the Accord. The problem is that in order to register the cars we would need to pay sales tax on the MARKET VALUE of each car. Is there a way we can trade cars and avoid paying sales tax? My car is registered in Connecticut. My mother in law’s car is registered in Mass.
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My mother in law has a Honda Accord and I have a BMW. I would like to give her the BMW and take the Accord. The problem is that in order to register the cars we would need to pay sales tax on the MARKET VALUE of each car. Is there a way we can trade cars and avoid paying sales tax? My car is registered in Connecticut. My mother in law’s car is registered in Mass.
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Comments
rotus on 16 August, 2009 at 10:42 am #
You may be able to gift the cars to each other and pay a lower gift tax, if there is one available in your states.
Bill W on 17 August, 2009 at 12:54 pm #
Because they are from different states and because it becomes a private sale no you will pay tax.I have to ask why dont you want to pay the sales tax that goes to help pay for schoo;s and such?
sandzman on 20 August, 2009 at 12:31 pm #
By having you pay tax on market value rather than actual sale price, states have ensured that they will get their take. It is not technically a sales tax but a registration fee which should be deductible on your federal income taxes.
Look into what sort of documentation would be needed to show the transaction as a gift and you may be able to lower your liability.