Another car buying question

[keweenawlove]

I'm buying a car from my parents. The transaction will take place in Michigan and then I'm registering it in Iowa. In Michigan, if it's a family member sale, your exempt from sales tax. In Iowa, you still pay 5%. Which rules apply - where I buy it or where I register it?

[Susie]

Where you register it.

I bought a car in NH, then registered it in NY.  I paid the sales tax at the DMV in NY.

[Deleted]

Where you register it.

We bought cars in MO but didn't pay sales tax until we registered in Kansas.

[keweenawlove]

That sucks. I'm assuming we have to list the sale price as at least what I'm getting the loan for?

[pamela]

Depends. Some states when you go to register it require that you pay sales tax for the purchase, even if you didn't purchase it in state (which is BULLSHIT IMO). Some of those states give at least a partial credit for any sales tax you paid to another state. You need to look up the rules for your registration state and see what they are going to require.

[Susie]

Jul 23, 2014 15:27:42 GMT -5 keweenawlove said:

That sucks. I'm assuming we have to list the sale price as at least what I'm getting the loan for?

Do you mean you assume that you need to cop to a sale price for purposes of determining sales tax of at least the $12k that you are financing, for the car worth $18k that you're actually buying from your folks for $15k? 

Um, yes.  Don't be shady!  The sale price is the sale price.

Remember that at the DMV you're going to be showing a bill of sale to determine sales tax, documentation of the lien to get the new title (the lien holder will listed on the title), and other such documentation.  It all needs to match.  I'm all in favor of saving money on cars, but fudging numbers is no bueno.

[keweenawlove]

Jul 23, 2014 15:38:26 GMT -5 Susie said:

Jul 23, 2014 15:27:42 GMT -5 keweenawlove said:

That sucks. I'm assuming we have to list the sale price as at least what I'm getting the loan for?

Do you mean you assume that you need to cop to a sale price for purposes of determining sales tax of at least the $12k that you are financing, for the car worth $18k that you're actually buying from your folks for $15k? 

Um, yes.  Don't be shady!  The sale price is the sale price.

Remember that at the DMV you're going to be showing a bill of sale to determine sales tax, documentation of the lien to get the new title (the lien holder will listed on the title), and other such documentation.  It all needs to match.  I'm all in favor of saving money on cars, but fudging numbers is no bueno.

I'm not trying to be shady I promise! There's just nothing specific online about which state it should actually be paid in and if it's the value paid, car value, loan value, or what. I finally talked to the treasurer (not the DMV like the CU kept telling me should have the answers) and it sounds like it's the money that changes hands. She wasn't able to answer which states we needed to pay it in though. I had assumed it was like any other purchase - you pay the tax in the state you buy it but I guess not.

[illgetthere]

Jul 23, 2014 15:45:07 GMT -5 keweenawlove said:

Jul 23, 2014 15:38:26 GMT -5 Susie said:

Do you mean you assume that you need to cop to a sale price for purposes of determining sales tax of at least the $12k that you are financing, for the car worth $18k that you're actually buying from your folks for $15k? 

Um, yes.  Don't be shady!  The sale price is the sale price.

Remember that at the DMV you're going to be showing a bill of sale to determine sales tax, documentation of the lien to get the new title (the lien holder will listed on the title), and other such documentation.  It all needs to match.  I'm all in favor of saving money on cars, but fudging numbers is no bueno.

I'm not trying to be shady I promise! There's just nothing specific online about which state it should actually be paid in and if it's the value paid, car value, loan value, or what. I finally talked to the treasurer (not the DMV like the CU kept telling me should have the answers) and it sounds like it's the money that changes hands. She wasn't able to answer which states we needed to pay it in though. I had assumed it was like any other purchase - you pay the tax in the state you buy it but I guess not.

Sales tax is paid on the sales price. The price you purchase it for. Ad Valorum tax when you get your tag is paid based on the value.

[Susie]

I can only speak for certainty re: NY procedures, but the sales tax is being paid on the car purchase price, not any number relating to the loan, the car value, etc.  Just like anything else you pay sales tax on, the number is a % of the agreed upon sale price, i.e., the amount the seller gets. Doesn't matter whether you paid cash for the whole thing, financed the whole thing, or some combination. It's exactly like buying ... I don't know, an appliance, except that you don't pay the sales tax until registering it at the DMV, instead of sales tax being collected together with the purchase price and then remitted by the seller to the state.

If you bought at a dealer and were registering in-state, they'd do this for you -- they'd collect the sales tax, remit to the state, and handle your registration docs. That's what's included when car prices are advertised "including tax & tags." Since you're not buying from an in-state dealer, you have a little more legwork.

[alleinesein]

Are you getting the loan for the car from an Iowa bank or a Michigan bank? I know that banks and credit unions in CA will send the sales tax directly to the DMV if you request it at the time you sign the loan documents.

If its that much of an issue why cant you just buy it in Michigan using the family loophole and then wait a month or two to register it in Iowa? How long do you have to register an out of state vehicle before you get hit with fees?

[illgetthere]

Jul 23, 2014 16:18:02 GMT -5 alleinesein said:

If its that much of an issue why cant you just buy it in Michigan using the family loophole and then wait a month or two to register it in Iowa? How long do you have to register an out of state vehicle before you get hit with fees?

If they did that, wouldn't they have to register it in Michigan first? That would mean they'd have to pay for a tag, plus I don't know if you can register a vehicle in a state you don't live in. They can't just not have a tag for a month or two.

[alleinesein]

Jul 23, 2014 16:30:50 GMT -5 illgetthere said:

Jul 23, 2014 16:18:02 GMT -5 alleinesein said:

If its that much of an issue why cant you just buy it in Michigan using the family loophole and then wait a month or two to register it in Iowa? How long do you have to register an out of state vehicle before you get hit with fees?

If they did that, wouldn't they have to register it in Michigan first? That would mean they'd have to pay for a tag, plus I don't know if you can register a vehicle in a state you don't live in. They can't just not have a tag for a month or two.

Depending on how some states are set up you don't always have to pay for a new tag if you buy a used car and the registration is current.  When I bought my BMW the bank handled all of the DMV stuff and I didn't have to pay for new tags/registration until the following year.  They DMV sent me new plates with current tags because the previous owners had personalized plates on the car.  You have the option out here of keeping the plates or having new ones issued.

I know that Iowa changed some of its car registration requirements and they are more strict.  When I lived there I didn't need an Iowa DL to register my car and they let me keep my car registered in Iowa while I was going to school in Colorado. 

[illgetthere]

Jul 23, 2014 16:44:36 GMT -5 alleinesein said:

Jul 23, 2014 16:30:50 GMT -5 illgetthere said:

If they did that, wouldn't they have to register it in Michigan first? That would mean they'd have to pay for a tag, plus I don't know if you can register a vehicle in a state you don't live in. They can't just not have a tag for a month or two.

Depending on how some states are set up you don't always have to pay for a new tag if you buy a used car and the registration is current.  When I bought my BMW the bank handled all of the DMV stuff and I didn't have to pay for new tags/registration until the following year.  They DMV sent me new plates with current tags because the previous owners had personalized plates on the car.  You have the option out here of keeping the plates or having new ones issued.

I know that Iowa changed some of its car registration requirements and they are more strict.  When I lived there I didn't need an Iowa DL to register my car and they let me keep my car registered in Iowa while I was going to school in Colorado. 

Ah, where I live, the plates follow the person, not the car.

[keweenawlove]

Jul 23, 2014 16:49:31 GMT -5 illgetthere said:

Jul 23, 2014 16:44:36 GMT -5 alleinesein said:

Depending on how some states are set up you don't always have to pay for a new tag if you buy a used car and the registration is current.  When I bought my BMW the bank handled all of the DMV stuff and I didn't have to pay for new tags/registration until the following year.  They DMV sent me new plates with current tags because the previous owners had personalized plates on the car.  You have the option out here of keeping the plates or having new ones issued.

I know that Iowa changed some of its car registration requirements and they are more strict.  When I lived there I didn't need an Iowa DL to register my car and they let me keep my car registered in Iowa while I was going to school in Colorado. 

Ah, where I live, the plates follow the person, not the car.

Yeah, that's turned out to be another complication. In MI, they follow the person too so my parents are keeping them for their new car. I called the Iowa registration to see what the process was for getting a temporary tag to move it here. They told me I have to physically bring the title to them before I can get anything. They said when I'm driving it from MI to IA without plates, as long as I have the bill of sale and title and tell any officer that pulls me over that I'm on my way to register it, I'll be fine. Doesn't seem right but if that's what they said the process is, not sure what else I can do. It's going to be a long ride back.

[illgetthere]

Jul 23, 2014 17:40:24 GMT -5 keweenawlove said:

Jul 23, 2014 16:49:31 GMT -5 illgetthere said:

Ah, where I live, the plates follow the person, not the car.

Yeah, that's turned out to be another complication. In MI, they follow the person too so my parents are keeping them for their new car. I called the Iowa registration to see what the process was for getting a temporary tag to move it here. They told me I have to physically bring the title to them before I can get anything. They said when I'm driving it from MI to IA without plates, as long as I have the bill of sale and title and tell any officer that pulls me over that I'm on my way to register it, I'll be fine. Doesn't seem right but if that's what they said the process is, not sure what else I can do. It's going to be a long ride back.

yeah, you just need the bill of sale to show it was bought within the last 15 days or however long you have to register.