Title tax FAQ

We are getting lots of questions about how the Title Tax might impact the current trade allowance for sales tax. Good question. We wrote GADA's attorney and got the following quote:

"The title tax will be calculated based on fair market value less trade-in value."

Of course this goes into effect in March of 2013.

 

If they wish, current buyers can opt-in to the new system on March 15.


•If the vehicle was purchased in Georgia between January 1, 2012 and March 1 2013 and titled in this state, the owner is eligible to opt in to the new system. If you qualify to opt in, you will get credit for any sales tax and ad valorem tax previously paid up to the amount of TAVT due. However, if the sales tax and ad valorem tax previously paid is less than the TAVT due, you will need to make up the difference when you opt in. This option must be exercised before January 1, 2014




Lots of answers here:
http://onlinemvd.dor.ga.gov/TAP/faqs.aspx

 

Read that helpful FAQ, but didn't see an answer to this:

If you trade in a car at the dealer, I presume that you will only pay sales tax on the difference. Trade in a $10,000 car and buy a $25,000 car, and you would only pay tax on $15000 (adjusted for the "fair market value").

So can a person who sells their old car privately claim a tax credit on that year’s tax return? i.e. pay 7% on that $25,000 car above at time of registering and then claim 7% of the $10000 car that they sell on craigslist on their 2013 taxes next year.?

I am almost sure that the answer will be NO.

 

get ready to open your wallets.................

i bet dealers love this new law

 

I am no expert, but leases might get interesting according to this document

http://motor.etax.dor.ga.gov/motor/DealerSection/forms/pdf/MV_%20Dealer_Tax_Guide_2013.pdf


Leases may have both TAVT and Sales Tax. Outright purchases only get TAVT.



• The TAVT rate is 6.5% in 2013, 6.75% in 2014, and 7% in 2015. Thereafter, the rate is
variable and may go as high as 9%.
• Leased vehicles are subject to TAVT upon application for certificate of title. Thereafter,
the monthly lease payments are subject to sales tax.

Those with TSPLOST don't get a complete break: (I wonder about the MARTA tax and other local option taxes ...)

Is the TSPLOST sales tax also exempted on a motor vehicle sale?
No, there is an exception to the sales tax exemption in the case of TSPLOST. When the
purchaser is a resident of a county that imposes the Transportation Special Purpose Local Option Sales Tax (“TSPLOST”) then a 1% sales tax will apply to the first $5,000 of the purchase price of the motor vehicle even though the customer is also paying the TAVT and the transaction is otherwise exempt from sales and use tax. Accordingly, no more than $50 of TSPLOST would be collected on the sale of the vehicle when the purchaser is a resident of a county that imposes the TSPLOST, but it could potentially be less. Regular sales tax procedures for collection and remittance apply to the TSPLOST funds



Reading the tax guide also mentions that dealers pay tax on the goodies they give away to buyers.

 

so you pay the TAVT on the value of a car you lease, pay sales taxes for 3 years and send it back ??

that's a complete hose job.

 

I think on a lease the state would view the ongoing tax as a use tax since the title fee replaces sales taxes. See, doesn't that make you feel better?


BT

 

i'm confused...

so if AV is going away.... what does the yearly plate fee go to $$ wise ?

say a 430 is $1,700 yearly for AV previously, the new plate fee goes to ?

 

If you purchased your car Before Mar 1 2013, you still get the honor of being RIPPED OFF and paying the ad valorem tax each year !!!!
Isn't that NICE !!!???

 

If you buy from a dealer do you have to pay sales tax AND Title tax? And if you buy from a private do you only pay Title tax?

 

No. It looks like the sales tax and AV go away on purchases. You pay just the TAVT fee plus splost if you live in that area

Leases look like they get screwed. You pay TAVT on the value of the car, sales tax on the payments and you get to pay TAVT on the buy out of the residual.

So you pay nothing yearly now ?

 

For those who fall under the new regs: You still pay annual renewal fee, prestige tag, etc. In other words, the only thing you don't pay that currently shows on your annual renewal statement is the Ad Valorem Tax.

 

Not so. If you purchased between 1-1-12 and 3-1-13 you have the option to "opt in" to the new law and have the sales tax you paid when you purchased applied as your TAVT + any additional amount due and pay the license plate fee each year thereafter or keep just keep paying AV each year. You need to figure how long you will keep the car at issue and do the math to see which method saves you the most money.

 

i think there was a link i saw somewhere that would compare pre- and post - change...

say i had a 2010 430. what would i be paying under the current system ? and then after ?

 

i called my local dmv office.

she told me, after paying the 6.5% TAVT fee, i would be responsible for the yearly plate fee which is $20 in cobb county.....

 

The new law could effect car owners in three ways:
•Residents who buy new or used cars after March 1 will now pay a one-time tax , 6.5 percent of the vehicle’s market value , to title their car rather than the annual “birthday” ( ad valorem tax )
•Residents who bought cars between Jan. 1, 2012, and Feb. 28, 2013, will have a choice whether to pay the one-time tax, or stick with the birthday tax.
•Drivers who bought a car before 2012 will continue to pay the birthday tax.(ad valorem tax)

http://www.ajc.com/news/news/state-regional/counties-urge-patience-as-new-tag-laws-take-effect/nWR9p/

 

So I am guessing if I buy a car in Georgia from a private party and title it back here in Alabama, I don't need to bother reading through this thread?

 

Apparently a "fix" is coming for the lease double taxation issue and a couple more modifications for "buy here, pay here" type of dealers.

 

Having private sales buyers pay the title tax will close a tax loophole that should have never existed. Every buyer should be taxed equally IMHO.

 

Will, are you sure about this? Have you guys taken any deals to the tag/tax office to verify this?

I am getting ready to buy a car and the dealer said if I trade my car I will still pay the full tax (TAVT) on the new car. He said there is no trade-in tax advantage anymore.

So the car we want to buy is $120,000. The car we have to trade is worth $70,000. I was expecting to pay tax on $50,000 ($120,000-$70,000=$50,000). But the dealer said no, I have to pay the TAVT on $120,000.

If this is true, then dealers trade-ins are going to be way down.

I also think the new tax law will kill vehicle sales in Georgia.

I like to trade cars often. So if I buy a $100,000 car and pay the 6.5% TAVT and want to trade it in for a new car in 2 years, I lose 100% of the TAVT paid. I don't get that credit towards a trade so I have to pay the full TAVT AGAIN! As a person who likes to trade cars a lot I would have been better off with the old VAT and sales tax; especially if I bought a used car from an individual.

I hope the dealer I'm talking to is wrong, but they move a bunch of cars so I think he would know.

Thanks,

Bill

 

I read that we may be able to transfer title to a family member and get on the new program. I'm not sure if any tax or TAVT fee would be due.

I plan on "selling" my wife a few of our cars before July so I'll report back if it works.

Bill

 

I was told yesterday by a friend who manages a large dealership that this is not how it works. He said we have to pay the new tax on the full amount of the purchase; in your example the tax would be applied to the $25,000.

IF, and this is a big IF, the tax is paid on the trade-in difference you could do an "In and out".

An "In and Out" works like this:

1.) I find a car I want to buy at a dealership.
2.) I find someone to buy my used car for more than the dealer is willing to pay me on trade.
3.) I buy the car I want from the dealer and they take my trade for the price I've agreed to with the other buyer, minus a couple hundred dollars for doing the "in and out".
4.) I pay the tax on the difference.
5.) The buyer of my old car pays the dealer for the car, taxes, and tags.
6.) The dealer makes a small profit on my used car because of the small profit I gave them on the trade. They also get a chance to sell them financing.

This worked when I lived in Texas because there was no advantage of buying from an individual. All car sales had a sales tax. This would not have worked in Georgia before the new changes because the person buying a used car from me wouldn't want to pay the sales tax.

Since Georgia's new law requires everyone to pay sales tax, even when buying from an individual, an "in and out" will help save you sales tax----assuming my dealer friend is wrong about a tax savings not being avalible for trade ins.

Bill

 

you pay the tax on the net difference of your purchase minus trade in at the dealer only.

you cannot sell your vehicle privately and then "claim" the trade in like you would via a dealer.

i see no reason to tax private sales. let's start taxing sales on CL and ebay.

this is a nice little bump for dealers. no incentive to sell your vehicle privately.

spent about 20mins on the phone with DMV.

lessors are currently getting screwed. you pay TAVT on the value of the vehicle (either outright or it is embedded in the lease). you pay sales tax on your payments. you pay TAVT AGAIN if you buy it out at the end of the lease.

pre 1985 cars are exempt unless you title it. time to go retro i guess

 

I just called a Carfax location to ask about the trade in issues.

Wow, this is complicated!

The person I spoke with said the State has a website that will do all the sales tax calculations for the dealers. She said she enters the car you're buying and the state uses the price the state says the car is worth vs what Carfax sells the car for to determine the tax amount. Huh?

She confirmed that the state DOES DEDUCT your trade! So my dealer buddy is wrong.

This is good news! Now, will dealers do "in and outs"? That will be the key to buying and selling your own car for a retail value.

Bill

 

If you do a sale to a family member you have to pay the title tax if the current title is more than a year old, but they let you do it in two installments (if the previous owner did not pay TAVT). If you own a car that was paid for more than 12 months ago, you wil owe the TAVT even though you already paid sales tax. If you bought it within the past year you can opt into the TAVT system by paying the difference between the sales tacx you paid, and the amount due under the TAVT. At a minimum, during the transaction you have to pay .5% year 1, adjusting up to 1% year 3, and then the difference to the TAVT over two installments (if you are going into the TAVT system), or you have to pay AV until the car retires.

The current TAVT rate of 6.5% is scheduled to increase to 6.75% in year 2, and 7% in year 3. After that the rate is adjustable, but is not allowed to exceed 9% (unless they pass a new law allowing a higher rate).


BT