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Buying a used vehicle/Sales tax



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Old 11-01-2006, 02:15 PM   #1
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Buying a used vehicle/Sales tax

Thought I would share what I found about the tax laws on buying or selling a used vehicle. It's somewhat long but their has its benefits:

A recent change to the law could force you to pay a lot more the next time you buy a used vehicle. As News 4 WOAI Trouble Shooter Jaie Avila reports, a loophole in the new law is costing all of us.

Down at the tax office, a lot of car buyers who avoided sticker shock by buying used are getting hit by a sales tax surprise.

"I don't think it's fair. I think we already pay enough money, enough tax," says car owner Jim Gonzales.

Like many other Texans, Gonzales is finding out that as of October 1st, the state has a new way of calculating sales tax when you buy a car from a private seller.

Before the change in the law, it was up to the seller and the buyer to report the sales price, which would then determine the sales tax paid by the buyer. But lawmakers felt too many people were lying, and reporting a lower price, in order to pay less sales tax.

Under the new law, the state will estimate how much a car is worth, based on its age and mileage. That estimate is called the "standard presumptive value". The sales tax you have to pay will be based on that amount, even if you paid less for the car.

For example, Jim Gonzales was going to sell a car to his sister for $1,000. Under the old law she would have paid $62.50 in sales tax.

Instead, under the new law, the state might estimate the vehicle is worth $3,000. The buyer would then have to pay sales tax on 80% of that amount, or, $150.

The person in charge of collecting the sales tax in Bexar County also thinks it's unfair. "In many cases, people just get good deals, and now they're going to be penalized for being a good buyer," says Sylvia Romo, the Tax Assessor-Collector for Bexar County.

The new law is intended to bring in more sales tax money for schools without raising property taxes.

But Romo says car buyers are so angry about the change, they've already found a loophole by claiming the car is a gift.

Gifts are exempt from sales tax. All the buyer has to do is pay a $10 fee. The state then loses out on any sales tax.
That's what Jim Gonzales ended up doing. "One reason is because of the appraisal. It's one way to, not have to pay that."

Will Gonzales and other car sellers really give away their vehicles? Who knows.

But Sylvia Romo thinks the legislature's attempt to crack down on sales tax liars, could just open up another way of cheating, that's even more costly.

The new sales tax law does not apply to vehicles purchased from dealerships, salvage vehicles, or cars over 25 years old.
To learn the "standard presumptive value" for your car, click here. Then click on the link for the used title tax. You will need your VIN number
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Old 11-01-2006, 03:19 PM   #2
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heyas mnmstoy, can you link back the original article? at the end it has a link to check the "presumptive value" that didn't copy into your post...


I wanna know what I can presumptively charge for my 'burb.
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Old 11-01-2006, 04:10 PM   #3
 
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Just sell your rig for what you want and wright the "Bill of Sale" or "Transfer of Title" as a gift (no money transfered). The state can't prove a thing. BTW, my Bronco's still for sale (transfer).
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Old 11-01-2006, 04:11 PM   #4
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http://www.txdot.gov/services/vehicl...tive_value.htm

is the link,,,you need the Vin # and Miles on the OD.
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Old 11-01-2006, 04:17 PM   #5
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Birdman that was the loophole that I was talking about. After paying off the cheby I gave it to my wife as a gift. We still paid the $10 and fees for transfers and license plate sticker. It came out to a little over $100 to get it in her name.
We didn't have to pay $$$ on taxes we already paid before. And honestly it was a gift.
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Old 11-01-2006, 04:25 PM   #6
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I posted something about this a while ago and I'll voice my opinion again.

n soapbox: the sticky fingers government was paid taxes on that vehicle when it was bought new. IMO that SHOULD be it! Once the vehicle is sold again, no more taxes should be collected!! I can understand a title transfer fee and things of that nature (within reason), but NO MORE TAXES! To cut costs, lets look at who's jobs are fluff and what organizations are getting our tax money that I am not aware of. Sorry, I hate politics and stay away most of the time, but this one rubs me the wrong way.
ff soapbox:
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Old 11-01-2006, 04:43 PM   #7
 
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Ok this sux I just realized that I will be paying tax on 2000 that i didnt spend. What kind of sence does that make. I just got a hella deal on a 2002 Jeep Wrangler with 51000 on it. I paid 8500 for it.
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Old 11-01-2006, 07:41 PM   #8
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But, the gift tax isn't a new thing. I suspect it will get used more now.
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Old 11-01-2006, 08:09 PM   #9
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But, the gift tax isn't a new thing. I suspect it will get used more now.

Nope not new but I used it this year. I guess two guys walking in the place and saying it's a gift would sound and look Gay.LOL but, then again why pay more taxes...your going to pay more once you get it under your name.

To each is own. My toyota is now a pleasure vehicle according to Allstate.
seems everyday something new is coming out to get more money out of us.
Mike.

20 years from now we all may just be riding bikes to work like Japan
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Old 11-01-2006, 08:36 PM   #10
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Originally Posted by mnmstoy View Post
20 years from now we all may just be riding bikes to work like Japan
I better get in shape for that. I drive 25 miles to work, each way.
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Old 11-01-2006, 08:40 PM   #11
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I made the move already...Moved three blocks from work...but that may change.....need to buy a house soon.
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Old 11-01-2006, 08:50 PM   #12
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Mike why did you have to put the chevy in your wifes name?
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Old 11-01-2006, 08:58 PM   #13
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Because, it is her truck.....I like my Toyota and once a month she has to ride with me.....which reminds me...a new month....O she is going to love that.


I was buying the truck befoe I met her so now that we sold her car...she wants a FS truck and she like it.....It's hers now...may it RIP
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