How can I trade cars with someone and avoid sales tax?
November 22nd, 2009 | by Michael |
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.
DERICK
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.
DERICK
4 Responses to “How can I trade cars with someone and avoid sales tax?”
By rotus on Nov 25, 2009 | Reply
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.
By Bill W on Nov 25, 2009 | Reply
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?
By sandzman on Nov 27, 2009 | Reply
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.
By m c on Nov 29, 2009 | Reply
give them to each other as gifts