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Buying Dad's old car - what can I get away with from a tax standpoint
Posted on 11/8/23 at 10:38 pm
Posted on 11/8/23 at 10:38 pm
He was offered $28,500 to trade-in his gently used SUV that he could probably sell himself for $32,000 or more, but is selling to me for trade-in value. To minimize sales taxes, how low a sales price could I get away with admitting? Is there a portion of the value he could "gift" to me? This will be a cash sale, no financing involved, and he's happy to do anything to help me avoid as much tax as possible. What's the best way to minimize my taxes?
4
Posted on 11/9/23 at 4:59 am to dcw7g
Act of donation. Give him cash. Easy
Posted on 11/9/23 at 6:27 am to dcw7g
First, if dad sells it to you directly then his sales tax on the new purchase will increase. He is losing the benefit of being taxed only on the difference between purchase price of new and trade in, therefore his taxable basis increases by 28,500.
You can do an "in and out" where the dealers takes in trade then immediately sells it to you, usually for a small fee. Your sales tax would be on trade in/purchase price.
This situation appears to be one where for every dollar you would save in sales tax, your dad would one dollar more.
You can do an "in and out" where the dealers takes in trade then immediately sells it to you, usually for a small fee. Your sales tax would be on trade in/purchase price.
This situation appears to be one where for every dollar you would save in sales tax, your dad would one dollar more.
Posted on 11/9/23 at 10:37 am to CHGAR
quote:
This situation appears to be one where for every dollar you would save in sales tax, your dad would one dollar more.
Assuming Dad doesn't care about the sales tax increase on his new vehicle (this is basically his Christmas gift to our family, and he can afford it), what would be the safest way to minimize MY tax responsibilities. If he "gifted" it to me (all or in part), would I still have to pay taxes on the blue book value when I register? I can pay him in cash on the side.
Posted on 11/9/23 at 12:38 pm to dcw7g
In sone states, when you register it in your name, you will pay at the tag office.
Posted on 11/9/23 at 1:00 pm to dcw7g
Which state?
Posted on 11/9/23 at 1:13 pm to makersmark1
quote:
Which state?
Louisiana
Posted on 11/9/23 at 1:15 pm to dcw7g
I looked briefly.
I don’t think you would owe “sales tax.”
However, if you write a check of more than a certain amount, the government looks at that.
The registration is unavoidable. It is what it is
I don’t think you would owe “sales tax.”
However, if you write a check of more than a certain amount, the government looks at that.
The registration is unavoidable. It is what it is
Posted on 11/9/23 at 6:43 pm to dcw7g
Here is a link to a form for a donation of MV in LA. I don’t think you owe any sales tax on a donation between immediate family members, thus the form asks for the relationship between the parties.
Of course, if you are really buying the car, you will be lying on the form that is filed with the state. That will be between you and Jesus and the DA.
LINK
If dad isn’t worried about paying more taxes on his purchase, maybe do the in and out described above and ask dad to pay your sales tax (which he just avoided on his purchase). Dad is out of pocket about the same amount whether you do a donation or in and out (with him paying your taxes), but one is legit and the other involves fraud.
Of course, if you are really buying the car, you will be lying on the form that is filed with the state. That will be between you and Jesus and the DA.
LINK
If dad isn’t worried about paying more taxes on his purchase, maybe do the in and out described above and ask dad to pay your sales tax (which he just avoided on his purchase). Dad is out of pocket about the same amount whether you do a donation or in and out (with him paying your taxes), but one is legit and the other involves fraud.
Posted on 11/9/23 at 7:08 pm to Twenty 49
quote:
Of course, if you are really buying the car, you will be lying on the form that is filed with the state. That will be between you and Jesus and the DA.
What's the fraud part of dad donating his son a car and the son giving dad $28.5K for Xmas
Posted on 11/13/23 at 9:55 am to weadjust
quote:
What's the fraud part of dad donating his son a car and the son giving dad $28.5K for Xmas
Perfectly legit subject to annual gift limits.
Make half the donation in 2023 & half in 2024 to avoid exceeding the donation limit; or give mom half & dad half....*
(*Not tax or legal advice- consult CPA or Atty.)
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