Submitted by [deleted] t3_z60y7o in massachusetts
Correct me if i'm wrong but when a person buys a car from a prviate seller for 10k, when they go to the RMV to register it, they have to pay 6.25% tax on top of that 10k as sales tax
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if that is incorrect, please correct me
if that is correct, then does the seller also have to pay some sort of tax? its not a business but i every business has tax on both the buyer and sellers side
Not based on the purchase price, but based on the bluebook value (or perhaps, whichever is larger?). If you buy a car for $1, you still have to pay sales tax based on its value, not just a dollar.
The RMV will charge the tax based on predetermined value of your car. If you paid 10000 and blue book value is 12000 your tax will be on the higher value. Seller pays nothing, unless they decide to include the money in there personal income tax returns
> If you paid 10000 and
FTFY.
Although payed exists (the reason why autocorrection didn't help you), it is only correct in:
Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. The deck is yet to be payed.
Payed out when letting strings, cables or ropes out, by slacking them. The rope is payed out! You can pull now.
Unfortunately, I was unable to find nautical or rope-related words in your comment.
Beep, boop, I'm a bot
This is correct, but I'd add two things. One, if you buy from a dealer or auction, that is the price used for sales tax calcs, regardless of kbb. Two, the person entering into registry system has discretion, which is not only registry employees but also includes people such as insurance agents who have registry access.
Oh, and seller is supposed to declare as income... so seller does technically get taxed, just not sales tax.
Surely only if there was a capital gain, which would be pretty rare outside of vintage cars or a crazy used car market (admittedly, we have had that recently).
In fact, if you sell to a dealer as a trade-in while buying another car, not only would you not pay income tax on it, but you essentially get a tax credit because the sales tax on the new car is based on the after-trade price.
RMV always charges me based on the “sale price” written in the bill of sale/title. Apparently this is up to the RMV agent when you’re titling the vehicle. The market value is used is for state excise tax calculations, though.
The past few used vehicles I’ve bought, the seller left the purchase price on the bill of sale blank so I could fill in whatever I wanted. I never asked them to do this, and always filled in the correct amount, but it seems common for people to fudge the numbers on private party car sales.
CALCULATING MOTOR VEHICLE SALES TAX on casual sales between private parties The Registry of Motor Vehicles and the Department of Revenue follow Massachusetts law in determining the amount of sales tax to be paid on the purchase of a motor vehicle. It must be the higher of the NADA value of the vehicle as published in the Used Car Guide as “clean trade-in” value [NADAguides.com] OR the actual price paid for the vehicle. The condition of the car will not reduce the sales tax determined. If the sales tax charged was incorrectly calculated for the motor vehicle purchased. For example, if the NADA “clean trade-in” value used in the calculation was not specifically for the car you purchased. Or, if the actual price paid for the vehicle, as used in the calculation, was an incorrect amount. Those are good reasons to dispute the sales tax. Massachusetts law requires the Registry of Motor Vehicles to use the higher of the NADA value or the purchase price in determining the sales tax. The Department of Revenue cannot take the condition of the vehicle into account when considering an abatement request. If the NADA value is higher than the purchase price, the NADA value must be used, regardless of the vehicle’s condition and DOR will not allow a different value. When should I dispute the amount of motor
That’s great, but I’m just saying, I’ve bought several used vehicles in private party sales in Massachusetts and I’ve always paid sales tax on what was written on the bill of sale when I registered them. Maybe the RMV can decide to charge a different amount, but they haven’t for me. The last vehicle I purchased, a motorcycle, was in October of this year, so I’m working with up to date info.
I can say the opposite happened to me. I bought a car from family for a very reduced price, but paid sales tax on the value, not the sales price.
Someone above wrote that the RMV agent has discretion to override the value written with the NADA value. Maybe because I tend to put the actual amount I paid on the bill of sale, they go with that. I bought a motorcycle at the end of the season for about half what it was worth and they only charged me tax on what I paid.
Yes the state WILL take their cut. Even tho they had nothing to do with the transaction.
Not only are they taking a cut, but they're taking a cut repeatedly on a product they've already taken a cut on.
Then they'll take a cut when you spend the money
Also if you sell a vehicle to a blood relative, you don’t need to pay sales tax. There’s a form to fill out.
Sorry to nitpick your choice of words but it is if you sell a vehicle to a legal reliative. Doesn't have to be an actual blood relationship (legal but not blood relative include adoptions, marriages, etc.).
No you're right, I just looked it up. Maybe it was the case before, I remember it being really strange when I filled it out. I was thinking what a screw you to adopted kids. I'm glad it's not the case.
Gift affadavit?ive bought every private car with one so far. Used to get them from my insurance company. Think u can print out online too
That's only suppose to work with family members. You've done it with strangers?
MVU-24 is gift form for anyone.
MVU-26 is family gift form.
But... the MVU-24 are only supposed to be used if its a real gift with no money exchanged.
I have yes. It has been a few years since i have done it. Also i wouldnt say strangers but i have deff. Bought from friends and had no issue.(no same last name)
Sea_Establishment300 t1_ixyu4yn wrote
No sales tax for seller. And yes you have to pay 6.25% on the purchase price