Capital gains? Your tax basis and your DMV value aren't linked You use whatever you actually paid for the car, plus it's gonna depreciate, so don't worry about capital gains The IRS doesn't care about you cheating the DMV on some fees....lol
Wouldn't it be easier just to register the car in a low sales tax state? Then just tell DMV that you travel to that state for business?
I found an advertisement for Heggen Law Office in the Dupont magazine, I called them out of curiosity and spoke to a very friendly and educated lady. She answered my questions and emailed me information about the Montana Law Office and Texas statutes at no additional cost. Setting up my Company and registering my Ferrari in Montana has saved me a lot of money, you just have to weigh the risks and make sure that it is a great opportunity for your personal situation. I have referred a lot of friends to them, they have been doing this for over a decade for people like me, they said the hardest question they had to ask me was what to name my Company.
if you do the montana LLC and register / plate the car in montana where should you insure the car? Montana or your home state? I would assume home state where the car is normally stored? Anyone know?
There have been several threads on this subject. Ask yourself if it's worth it to go this much headache to save a few bucks. Plus try to explain to the local police how your Ferrari has a MT license plate . Maybe you could get away with it for a Honda or BMW but not an exotic.
Spoke to a state trooper friend of mine... he said he wont care about the plate if registered to a business. My main concern is having appropriate insurance coverage and where to get coverage.
As you may notice, I live in Santa Barbara, California. One of my best friends lives in Livingston, Montana where he pays no sales tax of any kind, of course. Before I purchased my Modena last November, I was always amused to see so many Ferraris at the annual Montecito Motor Classic with Montana license plates, knowing full well that was a scheme to avoid paying the approximate 8% sales tax (varies a bit by county in CA) and associated yearly registration renewal fees. Montecito is a very affluent community adjacent to the city of Santa Barbara; I figured the high rollers there (some probably owning several mega-buck cars) were willing to assume the risks with setting up a probable phony LLC. Perhaps for them, getting caught and having to pay attorney fees, penalties, and fines would be chump change in relation to the impact it would have on their fortunes. However, a portion of the proceeds from the show goes to various departments of the SBPD, so perhaps they turn their heads on the paying participants with Montana plates. Ahh, a form of pork barrel politics at its finest. Kind of like the 11-99 Foundation, I suspect. Researching this potential savings scheme, I found a few recent articles that indicated the CA DMV is trying to crack down on this sales tax avoidance and are starting to investigate phony LLC's with the help of the state Attorney General. I don't know how many of these investigations have actually taken place, or ever will, for that matter. But I guess I was scared off and decided that the risks involved just weren't worth the $10,000.00 I'd save in sales tax. After all, I knew local Ferrari owners who had been pulled over and ticketed for "no front license plate" on a regular basis (most of them have changed their "evil ways" and now sport front license plates, by the way) and I had already been pulled over by the SBPD on two different occasions within a week of acquiring a Porsche for: a) Windows tinted too dark and b) one rear license plate light bulb being out, ostensibly because they were hoping to give me a DUI and make some real coin. I decided there was no sense in being pulled over due to Montana plates and then investigated about the registration. As many others have said in this and other similar threads, you'll have to make your own decision as to the moral implications and the cost/savings/risk. Trust me, it hurt to pay that $10k in sales tax and also the $1100 registration fee, plus knowing that I will have to pay another approximate $1000 each year I own the car for registration renewal. And double-hurts knowing my buddy up in Montana owns three cars and paid nothing in sales tax and pays almost nothing for renewal every year. But a California native like me knows how long the arm of the law has gotten here. After all, we need those taxes and fees to pay for more speed bumps, gang grafitti removal, and implementation and enforcement of laws to keep our huge and ever-growing populace safe here, don't we?
The issue is not usually sales tax, the issue is use tax, which is annual (paid every year). I live in Maryland, but just a few miles from the Virginia border. We do not have use tax in Maryland, but our "neighbors" in Virginia pay close to 5% of the NADA value of all vehicles EVERY YEAR. On a 360 spider, which NADA assesses at around $100k right now, this amounts to around $5000 ***every year***. I can see why people set up LLCs for an $1800 one-time cost. Pretty much every high-end exotic from VA at our local Cars & Coffee (in VA) has Montana tags.
One case in point that in my mind makes CT even worse than VA is a car enthusiast I met some time ago that has a primary residence in CT. He also has a residence in FL. So, a couple of his 'fun' cars are parked at his FL residence, titled and registered in FL, they never leave FL, he just drives them when he's here. Not sure how CT found out about them, perhaps through a blanket insurance policy, but they decided he needed to pay tax on them in CT. Haven't talked to him in a couple of years, but he was fighting it tooth and nail back then. Even mentioned the idea of saying 'screw you' selling the CT house and moving to FL full time.
None of this is as easy as it sounds. I bought my mom a car, she lives in MT. Skipping long story why it was in my name: It turns out to be difficult to register and license if you can't prove residency. Plus, your insurance can't write across State lines so you have some gymnastics there as well. Is it really worth the hassle with MT DMV, risk in CA, doing the extra tax paperwork, exposing yourself to the risks of audit, just to save 10K one time fee?
The Man wants his taxes. He already paid taxes in FL. That's not good enough. They want theirs too. Outrageous! I would get a separate insurance policy for FL and say blank you to CT.
I hate living in CT. My wife dragged me here. The only plus is being in the service in exempt on one car taxation/property tax every two years. Besides that, it's "bend over". But in thinking of moving to MT anyway.
You don't have explain anything to him. It's not "your" Ferrari. It belongs to a Montana LLC and is registered in that state as it should be. You just happen to own, totally legally, the MT LLC. This is why this thread is about making a LLC to own the car not putting it is your own name. Much different story.
OLD BUMP! (Sorry!) Not going to debate MT registration - we all know pros and cons. However, DO have two questions about related things! #1. For those in the know, and about your point ONE of becoming a licensed car dealer to avoid sales tax: How would this situation work?? You ARE a dealer. You have dealer plates, of course. You want to buy (BUT FINANCE PART OF) a luxury or exotic car. You need to have a lender approve your creditworthiness, and put loan in YOUR OWN PERSONAL NAME. However, due to lien, you of course need full coverage insurance. Just like all your other personal vehicle policies, the insurance is in YOUR OWN PERSONAL NAME. Let’s just say your name is Joe Smith. So, you simply add “X” vehicle (let’s say it is a Veyron in this case) to your personal policy, insuring with comp & collision, etc. Good to go!! Now, Joe Smith has a loan IN HIS NAME for half the worth of this vehicle (Veyron), and Joe Smith also has comp & collision insurance IN HIS NAME for “X” vehicle (Veyron.) Lastly - registration. Joe Smith is the sole managing member of his dealer, say “ABC CARS LLC.” Auto Dealers can be issued a “TITLE ONLY/NO REGISTRATION” at DMV, avoiding sales tax & registration, but receiving no plates. Then, any auto dealer (in this case ABC CARS LLC), would own any vehicle that is “Titled Only” in the dealer name. Joe Smith decides he will use an ABC CARS LLC dealer plate to drive his Veyron around, and he is happy. So, Joe Smith gets a “Title Only” on “X” vehicle that he purchased above (Veyron!), and uses his dealer plate to drive the car. When Joe Smith and ABC CARS LLC got the “Title Only”, of course the electronic lien was notated (for the lienholder.) When said lienholder receives/looks at title of “X” (Veyron), they are going to see, and or previously know, three (3) things: 1. JOE SMITH got a loan in his name for half the worth of his Veyron. 2. JOE SMITH maintains and carries comp & collision insurance on the Veyron, per his state law, at the coverages reqd by insurance company. The Veyron is in addition to his Kia Optima (that his wife mostly drives), and his “other car” (say a Honda Accord). Three cars total on the personal policy. Note: the Optima and Accord are properly registered, taxes were paid & have regular plates - they don’t use dealer plates. Joe just didn’t want to pay tax on the Veyron! 3. ABC CARS LLC, “owns” the Veyron - NOT Joe Smith, with whatever lienholder listed on there as well with ABC CARS LLC. So: What does the lienholder say about this slight discrepency????? No big deal??? Moving onto #2. Mind you, before answering this, KNOW and UNDERSTAND, it is *NOT* illegal to have a MT LLC own “your” vehicle!!! Disclaimer: While I’ve never been audited, and only know one person who has: I didn’t ask him specifics. With that said, many of you guys cited the risk of being audited as a reason not to do MT registration. Well, if you’re doing NOTHING wrong with your taxes - what’s it matter??? I don’t understand why it would be a big deal, or of ANY concern? Unless they charge a fee or something, if they want to waste their time looking into you - why wouldn’t you simply & happily provide your documents, and with a big smile say how much you love driving your Veyron registered to your MT LLC and with MT plates, then sit back, relax, and let them spend hours of their time analyzing you/your company, only to later receive validation that all is good, and you’ve done nothing wrong?! I’m just not seeing that argument? Thanks guys!!
I know here in KS, people are actively being investigated for that, and they can go back 10 years should they want to. It is simply not worth it. You have to have a legitimate business in MT - that is easy, but, you have to have your car there for at least 6 months of the year, and that is where it gets tricky. Those are the two main reasons, but there are tons more in the fine print. If you can meet all the criteria, then it makes perfect sense, but, if you do it simply to avoid/evade taxes, then you are playing with fire and time.
