Titling in another state to avoid sales tax

at my former firm, we have structured transactions to avoid sales tax for substantial purchases. even went so far as to get a ruling from fl dor. the cost are the legal fees and not being able to have the car in fl for six months. it may work in certain circumstances, such as, the car will be in the resto shop for a while anyway. we think it only makes sense if you are avoiding at least $25k sale tax. not that the transaction costs are so high, but do you want to go throught the effort and be w/o car for six months to save 10K?

 

What you are saying is fine from a sales tax point. But if you bring the car into your home state for even a minute then you would owe sales tax.

NYS sales tax auditors often go to marinas and look up out of state boats to see if the owners are NYS residents. If they are then they get hit with sales tax.

Most states are getting very aggressive in the sales tax area. Its an easy way to raise revenue.

 

I "Federally Documented" my boat (i.e. no state registration & taxes ) and the state took two years to catch me after the "City Run Marina" divided up the parcel and taxed individual slip-renters "On the amount of Water they occupy"

How's that for asinine...

The states need money... so they'll find you eventually ...~!

Pay it and avoid the inevitable...
Patrick

 

Reviving a very old thread here...
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Without me looking at 40+ state policies besides the various states I already know about and researche:

Does anyone who has researched this, or who may live in a less "popular" state, know the state(s) with the best situations for fees/taxes imposed on used cars bought from out of state?

Let's cross states off the list as follows:
1) I despise the idea of "personal property taxes," so any state that has one whether on a vehicle or not gets excluded.
2) States with traditional sales tax that impose thier sales tax rate on every motor vehicle purchase to be registered in that state (unless you think the rate is really low)
3) Any states having a scenario where your car gets appraised every so often for the purpose of assessing tax value

I've seen Montana used as a place to set up an LLC and avoid the tax legally. Again I haven't researched every state but New Hampshire has vehicle value tax, South Carolina has vehicle property tax, and Delaware has a 3.75% "document fee" assessed on total purchase price of vehicle.

 

Montana -- but don't drive your car too often in your local state...

 

South Carolina does have sales tax and property tax on vehicles, but both are marginal.

Sales tax is capped at $300.

Property tax is based on age, not value.

I just registered my 22 year old Ferrari 348. Total was $300 sales tax and $17.74 in property tax.

 

Federal Documentation trumps all forms of domestic boat registration in any state... you got caught for NOT paying the state use tax, which is collected by the states to use their water ways... if the boat were transient and not become captured as a resident of a particular state, a state's use tax could be avoided. Typically a boat becomes captured as a resident of a state if it remains in a state in excess of 185 days ( check each state for correct day count ) Florida is a good example of a state capturing vessels for over staying, marinas empty of boats as their time in state reaches max limit to retain transient status... they leave the state, get receipts for their stay and fuel elsewhere before returning to start the cycle over again. Not a problem with documented vessels that move between states several times during the year.

 

California actually has a 'report an out of state vehicle' program. I wouldn't want to get caught..not worth the headache.

 

Here is how it is done. Enough said...

How to Avoid Sales Tax?Legally

How to Avoid Sales Tax-Legally, Part II

 

Here in the Fairbanks North Star Borough they just started a program where if your car is more than 7 years old you can register it for as long as you keep it for $75.00. The license plate sticker has the letter "Z" instead of a year.

 

Not to correct you or to be contrarian, but I seem to be reading that in SC, the local county determines how to tax the vehicle property.

For example, in York County, near Charlotte, NC, South Carolina taxes the vehicle at 6% of the car's retail value. Ouch.
https://www.yorkcountygov.com/RegisteringAVehicleAddressChange

Could you explain/ elaborate and perhaps share county of your residence?

 

I'm in York County, just south of Charlotte.

And I stand corrected, I see from my receipt I actually paid $21.71.

I think the key phrase from the provided link is "The retail value of your vehicle is determined by using guides provided by the South Carolina Department of Revenue." Fortunately, SC's Revenue Department is not in tune with the collector market.

You can see that the appraised value is $833, which is extrapolated from the age. So yes, it is the "retail value" of what the county assumes a 22 year old vehicle would be worth (and if you've seen some of the older wrecks running around here, in a state with no safety inspections, you'd understand.)

My 1967 Vespa Sprint and my 1973 Alfa Romeo Spider are similarly taxed. I've actually had the experience of providing a Bill of Sale, and being told, "We don't care what you paid for it, what matters is what the book says."

The daily drivers in the household are more costly, as they're newer. Example: 2012 FIAT Abarth, $26,500 new, is now appraised by the state at $14,833, with a tax bill of $387.35.

But once a vehicle hits the 15-20 year old point in this area, the property tax becomes negligible.
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Wow, got it. Thank you for that!

Another few questions:
1) Does the county come up with the value all its own?
2) Have you ever been in a situation where you disagreed with the value? If so, what was the action taken?

South Carolina is sounding like one of the best places. I've considered taking up residence in York County.

 

1.) Yes, the county has its "big book" they reference. My prior collector exotics, a 1986 Ferrari 328 GTS and a 1985 Porsche 911 Cabrio, both appraised at $833. I expressed my surprise at the tax window (initial taxes must be paid in person when titling a new vehicle) and was told, "These are old cars, Sir."

2.) Never disagreed. Note that if you buy a brand new BMW 5 series, you're going to get a big property tax bill, but that bill goes down every year, and appraised values seem to drop faster than actual depreciation.

And, of course, your sales tax is always capped at $300. So buy a 2016 Honda Civic or a 2016 McLaren, and pay $300 in sales tax.

C'mon down. Many displaced New Yorkers here, what with all the banking and finance jobs...

 

Haha thank you. I will be coming to visit shortly I hope to further my research.

I have read the $300 sales tax thing. Sounds nice at first glimpse... But if we buy a McLaren or a LaFerrari brand new, we still have to pay a property tax annually based on the car's value from new, no? In this case still probably less than the 8.625% sales tax in NY, but it looks like SC will get its share on new or new-er cars. N'est-ce pas? Hence your BMW example?

Or is the retail value of a new car not based on its MSRP?

Last question. Do you benefit from any kind of "trade-in" credit against taxes paid already... For example, in NY if you bought a car for $100,000 and a year later you go to trade it in for $80,000 for a car that costs $150,000, you'll be taxed on the difference between those two prices. You'll have to pay sales tax on $70,000. So your trade in at $80,000 carries a tax credit.

Thanks again for this wealth of information. Nothing like speaking to an actual resident rather than relying on Internet information which at best is inconsistent.

 

Please note- I edited my last post a few times...

 

If you do something to avoid paying sales tax on a purchase that you really ought to be paying sales tax on, you are breaking the law.

If you are buying a Ferrari, you can afford to pay the tax, just pay it.

I hate paying taxes too but what are you going to do. If you engage in one of the schemes above even though it might be legal on paper you are still likely to get into trouble. Plus your neighbors are going to see your new ride on your driveway with some Montana plate on it and they will be whispering, "look at our ****** neighbor, bought himself a Ferrari but he's too cheap to pay the tax ..."

Just pay the tax, that's my 2 cents.

 

This isn't a scheme. I am speaking about taking residence in South Carolina. Not being wise but your legal advice is something we know without being told, and it has been stated already in this thread. The purpose of this thread is to find out what the rules are, and then we can all take our chances as we wish.

 

It's not legal advice, it's an opinion and if you didn't want opinions you wouldn't be on an internet chat forum. Good luck with those taxes.

 

Nothing to get snippy about. You made a statement that has been made many times over and it's something that we all know without being told. It's like asking a wife, girlfriend, or mother- "Did I receive any mail?" And the response is, "Well, did you check in the mailbox?"

 

Looking at my other tax records, I see that the year I got my Abarth (approx $26,500 in my case) it was taxed $418.27, based on an appraised value of $17,500. I seem to recall $17,500 was the base price of a FIAT 500 Sport. Extrapolating from that, I'd guess their book of values takes a flat figure for an average example of each model's MSRP, minus accessories.

Also, if you get a new vehicle but transfer the plate from another vehicle you sold, you can get credit for taxes already paid. In the case of the Abarth, I had an e46 BMW M3 that I'd purchased in January 2011. January 2012 rolled around, and I had to pay the taxes again, an annoyance, since I had it on the market. Sold it in February. April 2012, I bought the Abarth and transferred the tag from the BMW. Was pleasantly surprised to have the Abarth tax reduced by the amount already collected for the BMW.

I moved here from New Jersey in 2006, and I'm still in awe of the lower taxation. In Haddon Township, NJ, I was paying nearly $8000 property tax on a $300,000 house on a 120' x 65' lot, back in 2005. Here, 10 years later, I'm paying $3500 property tax on a house worth double that on a 1/3 acre lakefront lot with a dock.

 

Sounds like you're trying to defraud your gov't

 

To whom are you directing this comment?

 

Doesnt sound too bad when the government does that to its citizens 24/7.

 

+1!!!!!!!