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Sales tax - Purchasing a vehicle in one state, moving to another...
Posted on 12/27/16 at 12:30 pm
Posted on 12/27/16 at 12:30 pm
This situation is completely hypothetical...
Was having this discussion at lunch with some co-workers, and they mentioned something that seemed a little absurd to me.
I understand that you can purchase a vehicle out of state, but register it where your residence is, and pay the sales tax for the state in which you reside.
However, let's say I purchase a vehicle in Louisiana, 2 years go by, and I decide to move to Texas. Upon registering my vehicle in Texas, what are the tax implications?
My co-workers seem to think I would be paying a sales tax on the worth of my vehicle as part of the registration process. This seems absurd to me, as the sale occurred in Louisiana, the vehicle is registered in Louisiana, etc...
Are people really obligated to pay the sales tax on their vehicle again upon moving to another state?
Was having this discussion at lunch with some co-workers, and they mentioned something that seemed a little absurd to me.
I understand that you can purchase a vehicle out of state, but register it where your residence is, and pay the sales tax for the state in which you reside.
However, let's say I purchase a vehicle in Louisiana, 2 years go by, and I decide to move to Texas. Upon registering my vehicle in Texas, what are the tax implications?
My co-workers seem to think I would be paying a sales tax on the worth of my vehicle as part of the registration process. This seems absurd to me, as the sale occurred in Louisiana, the vehicle is registered in Louisiana, etc...
Are people really obligated to pay the sales tax on their vehicle again upon moving to another state?
This post was edited on 12/27/16 at 12:31 pm
4
Posted on 12/27/16 at 12:36 pm to dcrews
I don't believe so as no sale is/was involved. We live in Texas and have paid tax twice on used cars but they were sold/gifted to us.
This post was edited on 12/27/16 at 12:38 pm
Posted on 12/27/16 at 1:06 pm to wfallstiger
Your co-workers are correct. An estimated value is established for your vehicle (this one im not so sure how they estimate, dont believe its a kbb or nada value, just not sure) in the state the vehicle is registered in and you pay taxes on that.
Posted on 12/27/16 at 1:47 pm to dcrews
quote:
Are people really obligated to pay the sales tax on their vehicle again upon moving to another state?
There are reciprocity agreements among many of the states. Some of them may call for paying the difference between a higher rate in the receiving state and a lower rate in another state. If you're unlucky and are moving to a state that doesn't have a reciprocity agreement, you may wind up paying the full tax again.
Posted on 12/27/16 at 1:54 pm to CoachRobertson
quote:
in the state the vehicle is registered in and you pay taxes on that.
Hypothetically, lets use the numbers below.
So if I have a $50k vehicle, and LA sales tax is 10%, I pay $5k taxes on the purchase of said vehicle.
I moved to Texas 2 years later, Texas sales tax is 10%, and they deem the value of my vehicle to be $40k. I pay another $4k, for a total of $9k taxes paid in 2 years? That's absurd.
Posted on 12/27/16 at 1:57 pm to Layabout
quote:
Some of them may call for paying the difference between a higher rate in the receiving state and a lower rate in another state
If I paid less taxes in the original state I was registered, then had to pay the difference in the new state I am registering in because they have a slightly higher sales tax rate, THAT I can understand.
It still sucks, but at least I can logically wrap my mind around it.
What I don't understand is the concept of paying "double" the tax just for moving to a different state.
This post was edited on 12/27/16 at 1:58 pm
Posted on 12/27/16 at 2:55 pm to dcrews
I had to deal with this when I moved back to LA, because we had cars we bought and registered in Texas. I think this is how it was done.
1) They calculate the FMV of the vehicle.
2) They look at the state-only sales tax percentage, and compare it to the state and local use tax percentage for where you want to register the vehicle.
3) They calculate the difference in percentage, and charge that against the value of the vehicle.
So, for example... Texas has a state rate of 6.25%. I registered my car in St. Bernard which had, at the time a state and local rate of 8.75%. The difference is 2.5%. They charge 2.5% against the FMV of the vehicle. If the FMV of the vehicle is $10,000, then they charge $250.
I got no credit for the sales taxes paid to Harris County of 2%.
1) They calculate the FMV of the vehicle.
2) They look at the state-only sales tax percentage, and compare it to the state and local use tax percentage for where you want to register the vehicle.
3) They calculate the difference in percentage, and charge that against the value of the vehicle.
So, for example... Texas has a state rate of 6.25%. I registered my car in St. Bernard which had, at the time a state and local rate of 8.75%. The difference is 2.5%. They charge 2.5% against the FMV of the vehicle. If the FMV of the vehicle is $10,000, then they charge $250.
I got no credit for the sales taxes paid to Harris County of 2%.
Posted on 12/27/16 at 8:31 pm to LSUFanHouston
Way it was described to me is that states primarily use (or are supposed to use) vehicle taxes on roads. They charge the tax b/c you are now mainly using their roads. Agree it's complete BS but that's the way it goes.
As far as discounts go, I think it usually has to do with reciprocity b/n neighboring states usually - not a straight difference in tax rates/amount paid. I.e. when I moved to LA from AR, there was a discount. But there might not have been a discount if I had moved from Minnesota
As far as discounts go, I think it usually has to do with reciprocity b/n neighboring states usually - not a straight difference in tax rates/amount paid. I.e. when I moved to LA from AR, there was a discount. But there might not have been a discount if I had moved from Minnesota
Posted on 12/28/16 at 1:09 am to dcrews
You only pay sales tax once on your vehicle. The dealer will ask you which state would you like to register it in. Or if you do private party it is whatever state you go to register it.
If the vehicle is new and has "options" the DMV will tax those too. So just because you have a estimated amount just know you'll pay extra for that "crome package" or whatever added.
Now if you have paid and a year later you move they don't tax you but will/can charge you by your vehicle to "transfer it" each state varries.
Now if you're talking about a state that has personal property tax that is different. I moved from California to Arkansas and found this out. I was military so in California where your registration is based off of your vehicle, but Arkansas calls it personal property tax. I was military so I paid $55/yr in CA. When I went to AR I paid like $1 for tags but went to the accessors office to complete the registration. I told them I was non resident military but it was a small town not used to military personnel (I was a recruiter) so they said yeah we don't know about that so we aren't doing it and you owe us the PPT. luckily the next year I argued and they looked into it and refunded me the money.
Each state is different. But you don't pay sales tax you generally pay transfer fees or personal property tax if that state does it.
Right now I'm rocking NC plates but when they expire I have to switch them to Illinois. Illinois doesnt do PPT but tags are I think $120 for vanity and I'll pay a transfer fee based on the vehicle. But that will be a one time thing here. Every year after I'll just pay the $120 sticker renewal.
Hope this helps
If the vehicle is new and has "options" the DMV will tax those too. So just because you have a estimated amount just know you'll pay extra for that "crome package" or whatever added.
Now if you have paid and a year later you move they don't tax you but will/can charge you by your vehicle to "transfer it" each state varries.
Now if you're talking about a state that has personal property tax that is different. I moved from California to Arkansas and found this out. I was military so in California where your registration is based off of your vehicle, but Arkansas calls it personal property tax. I was military so I paid $55/yr in CA. When I went to AR I paid like $1 for tags but went to the accessors office to complete the registration. I told them I was non resident military but it was a small town not used to military personnel (I was a recruiter) so they said yeah we don't know about that so we aren't doing it and you owe us the PPT. luckily the next year I argued and they looked into it and refunded me the money.
Each state is different. But you don't pay sales tax you generally pay transfer fees or personal property tax if that state does it.
Right now I'm rocking NC plates but when they expire I have to switch them to Illinois. Illinois doesnt do PPT but tags are I think $120 for vanity and I'll pay a transfer fee based on the vehicle. But that will be a one time thing here. Every year after I'll just pay the $120 sticker renewal.
Hope this helps
Posted on 12/28/16 at 9:30 am to dcrews
I've never re-titled a vehicle when I changed states.
If you live in a state where you pay personal property tax on vehicles you will add it to the property tax roll, but I don't think there is any requirement to re-title it.
If you live in a state where you pay personal property tax on vehicles you will add it to the property tax roll, but I don't think there is any requirement to re-title it.
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