Which state are you in where they don't charge sale/use tax on used cars? In Cali you have to pay a use tax even if its a used car if you register it at DMV...

 

I would guess the gent lives in Nevada, as there are no sales taxes on private party sales in that state.

 

Even so, if you want to register it in a state that does have sales tax, you have to report the purchase price and pay the registration state's sales tax rate on that amount. If you already paid tax on the purchase in the other state, you can deduct that from what you owe the registration state, but if you paid no tax, then you owe what you would've paid in sales tax had you purchase the car in that state in the first place (you do NOT get a credit if you paid more tax there than you would have owed in your registration state). This tactic is precisely how states disincentivize people from purchasing cars in neighboring states that have lower or non-existent sales tax rates. It's called "use tax".

So it sounds like this person either isn't familiar with how these transactions work or else is planning to commit some sort of tax fraud. (UPDATE: Guess not.)

 

I have a home in CA and NV but spend the majority of my time in NV so that's where my residence is. Hence I will register/title the car there (just like my other Porsches).

That is correct. I believe that it was in 2006 that NV passed the law which states that if an individual purchases a used car from either an in-state or an out-of-state seller no sales tax will be paid on the transaction. I've used this law for about a half a dozen cars which has saved be around $50k in sales tax. Screw CA sales tax!

I'm buying the car USED from a private individual and not from a dealer/broker so I'm well within the bounds of the law for the state of NV. Of course I'll have to pay normal registration and title costs for the car, just like any other car that is registered in NV. So how am I planning/committing tax fraud?

 

Friendly state of NV as I mentioned. Feel free to go onto the NV DMV website and look up the law regarding private party used car purchases.

 

My apologies, post above edited. I've just heard of people grossly under-reporting the sale price of a privately purchased car in order to dodge sales tax. If you can actually register the car in NV rather than just purchasing it there, you're golden. Enjoy in good health!

 

No harm, no foul....I hear a lot of people do that in CA. The key in the whole thing is that I have to buy the car used for a private individual seller to be exempt from having to pay sales tax.

 

From what I am hearing, 10K over wouldn't be worth it if there are no LWBs, yes? Apparently, the best I can go is the 2nd best adjustable sport seats because the build is locked.

 

10k over is not worth it if you can't spec your options IMO.

 

NV sounds like tax heaven - I just can imagine how many cars would trade hands here with those rules. We use brokers as intermediaries so we just pay taxes for the difference - but those brokers are $500 up. Taxes are 15% here on vehicles more than $50k. Not as brutal as Europe but still expensive.

 

This is exactly what I am starting to realize.

 

It's only tax heaven if the buyer can actually register the car there rather than just buy it there, otherwise you end up with the use tax issue I described above. Although yes if you're a Nevada-based broker flipping cars, it would work well for you. As for the customer paying tax on the difference, that's typically the difference between the trade-in value and the car you more buying, not the difference between the seller's original purchase price and their selling price to you. Not all states allow the former deal, and the latter sounds a lot like "transfer pricing", a loophole that some businesses definitely do use when moving product between states before final sale.

But Nevada isn't the only state with no sales tax. Oregon doesn't have any either. Somewhat unrelated, but Texas doesn't have any state income tax. But don't worry, such states always make up the shortfall elsewhere; Texas does it with relatively high property tax, for example.

 

Even though there are things that I love about CA, their taxes (income and sales tax) are out of hand. Fockers don't even allow you to have a trade-in sales tax credit let alone no sales tax on private party purchases. Fortunately NV also allows a trade-in sales tax credit (i.e. you only pay tax on the net price after the trade-in). If only Vegas had weather like So Cal, it would be heaven.

 

I would not have paid the $10k premium had the car not had LWB seats AND it being 90% to how I would spec the car.

 

I moved from CA to TX and when I heard about the trade-in tax credit, I admit I was surprised that it existed. From a logical standpoint, I don't really see why people should get a tax rebate on a new purchase simply because they're trading in their previous purchase -- not that I'm complaining, but I definitely don't feel entitled to such a perk. The more I think about it, the more I think it's something that the dealers lobbied for in order to incentivize people to trade their cars in where they're buying a new one, since that bags them TWO transactions from which to generate profit and also allows them to lowball customers on trade-in valuations since they know that in order for it to be worthwhile for you to sell elsewhere, the competing offer would have to be at least (in TX) 6.25% higher.