Greetings! I am thinking of purchasing a '69 from a private seller in WV and titling/registering the car here in Maryland where I live. (used to own a '58 for a few years a while back). I've done a lot of searching around on the forum and reading past posts on the issue of taxes but still have a few questions that hopefully someone can assist with.

Looking through the MVA web site, it seems that I only need a signed title with the purchase price and not a notarized bill of sale. However, I'll probably get one notarized anyway. It looks like MD will take another 6% of the sales price but I did have some thoughts.

1) Knowing that there is a wide spectrum of prices for classic cars depending upon the condition (beat up clunkers to perfectly restored limited editions). Let's say the seller is asking $30k. What is to prevent me from offering him $15k for the car and $15k for his documentation/key chain (or a can of pepsi or whatever)? Sort of like 'bundling' on American Pickers

That way I would only list the sales price as $15k because that's all I paid for the "car". Is there a disadvantage to that somehow?

- Can I only insure it for that much or can I insure it for whatever I want?
- Does that hurt me on the other end when I sell it in the future as far as more capital gains tax or something else?

2) What about this idea? I co-sign the title with my father in PA (who pays a dollar) but just keep the car locked in his garage for 3 months (or however long), and then he 'gifts' it all to me and I bring it back to MD. I've read here about people buying cars, keeping them at a vacation home out of state, and then bringing them in after a period.

3) I think you can title it (in MD) without registering it (of course you can't drive it then), but do you pay the sales tax when you title it or when you register it?

I'm sure I'll just end up doing it by the book but it does't hurt to look at possible loopholes

Thanks,

 

Other than being illegal, I can't think of any disadvantage.

 

You pay tax when you purchase it, not when you register it. I don't understand the PA scenario with your dad. You'll pay PA 6% sales tax in that scenario and a signed title isn't legal in PA. All transactions have to take place with both buyer and seller at the notary office. In PA, if the price paid seems too low, they will ask a lot of questions. They've seen this trick, and played this game far too many times to be beaten by amateurs like us. Do it by the book and give up the other ideas.

 

Because I would be buying it from a private party and not a dealer, I wouldn't be paying tax until I title/register it. (excise tax?)

 

Try this link:

http://www.taxevasionmadeeasy.com

 

There is a time honored tradition of understating the sale price of used cars when you go to pay the sales tax, and I can understand why. The state already collected sales tax when the car was sold as new. Now they want to pocket money every time it's sold? I don't like that idea. After all, you could sell your used tools, electronics, diamond ring, etc and you don't have to pay the state for that. So, while I'm not officially endorsing the idea of lying to the government I can say that it happens all the time and if the purchaser is reasonable, the state doesn't usually ask questions.

 

When buying across state lines, you will have to pay sales tax on the purchase when you attempt to title the car in your state OR prove that you paid sales taxes on that purchase in the state where you bought it. It just depends on the tax laws in those respective states and their agreements on which state gets the sales taxes.

I lived in Arizona when I purchased my present '71; but I purchased the car in California. If I had chosen to drive the car from the place of purchase to AZ, I would have needed to pay sales tax in CA. But, I decided to have the car shipped to AZ; thus, the taxes were paid to AZ, as it became the "place of transfer" to my ownership.

The various states have different requirements. If you want to be certain of how this is handled, call the BMV's in both states.

 

On many vehicles of a certain age the state already has a declared value listed in their records and charge you accordingly for taxes. It doesn't matter where you paid $10K or $1, they charge you a pre-determined amount based on whatever they base it on. In NC, to transfer title you have to either have a signed and properly notarized title in hand or both parties go to the DMV and sign it so it can be witnessed. A bill of sale is not required. If you show up with a title signed by the owner and not the purchaser with no notary, then you have wasted a trip because the title is not valid anymore. They keep records of such, too, so you can't go home and "fix" it. Then they can charge you for a replacement title.

 

In a private sale there is no sales tax collected in any state I know of.
The tax is collected by the state that you will title and/or register it in.
Title only will require sales tax whether you get plates or not.
Most states allow gifts untaxed, no matter what the value, but you need signed documents to prove that.
Some states also have an impact fee of sorts for bringing in out of state vehicles.
Stating a value less than the real sale price to avoid taxation is a felony in most states.

 

Why do people start threads like this. If you want a lesser price on the bill of sale so you pay less taxes why post it here for the world to see. Just do it. It is done everyday.
If you don't need the bill of sale notarized don't do it.

 

I have a 67 GTO that I paid $8500 for. That car new was around $3500. Now if this car was sold 8 times then the state has probably collected more tax on the car than what it cost new.

 

Here is the correct info for MD...

I just bought/registered my 69 as Collector vehicle.

MD uses the Bill of sale for the Excise tax. If there is no bill of sale, they will use some value in the NADA book.

At the time of registration, you must have a copy of your collector insurance + application to bypass the state inspection.

Good Luck.

http://www.mva.maryland.gov/About-MV...tevehicles.htm
http://www.mva.maryland.gov/Vehicle-...EG/default.htm

 

This is true. And speeding is a civil infraction in most states. And not paying sales tax on internet purchases is against the law in most states.
I'm NOT endorsing any of the above activities. They are illegal. You can be prosceuted. Yet, people choose to break these laws all the time. It's a shame really.

 

They probably have - assuming everyone accurately stated the sale price of the vehicle. I know you did.

 

Gluvnaa,

Did you have to have the bill of sale notarized?

 

what the op is suggesting is illegal. he must pay his fair share just like the rest of us. stating to go ahead and do it in this forum is not what this forum should be about.

also from the opposite end is true. if you sell your car for more than you have into it, you owe capital gains tax.

if your car is wrecked or stolen. you will in many cases need to prove your loss to the insurance company. try submitting a declaration to your insurance company for double the price that you declared to the motor vehicle department.

same is true for all the bozos that never transfer the title to a car, and therefor avoid sales tax collection. ( make me wonder how they drive it on the street legally).

just because a commodity is bought and sold several times, does not mean that no sales tax is owed each time.

 

In the VAST majority of cases, the value added by restoring a car is far less than the cost of the restoration, so it's not an issue.

This law is nothing more than a money grab for the states. It should be changed. (At this point, I'm obligated to point out that ignoring the law is not an acceptable way of changing it.)

 

Joewill,

Good points! I just wanted to make sure there wasn't a legal loophole. I don't think it is worth the risk (in insurance and legality). Plus, I hope to eventually sell it for a profit (long in the future), so I'd prob pay more in gains down the road than the tax now.

 

Not registered yet.

 

Lucky dog. In Michigan, you pay the sales tax when you change the title, and you're obligated to change the title within 15 days of purchasing a car.
But you should get in line on day 13 beacuse you're likely to wait in line for a day or two.