School me on used car tax, tag, & title costs

[Pewter Sonoma]

It's been 4 years since I bought a used car and I have forgotten how this works. To add a kink to it - the car I'm lookig at is in Virginia. So do I pay sale tax in TN, or Virginia, or both? Can anyone breakdown/calculate what it will cost?

Also, is there any advantage to taxes buying used vs. new (minus the new having a higher price)? Meaning, is the tax % lower on a used car vs. used, or is it all the same?

If a car is sold 5 times, is there sales tax each of those 5 transactions? (I thought I remembered that items can only be taxed one time, and it's taxed to the end user - so establishments like 3rd party distributors don't pay the tax, but rather pass it along to the end user).

School me car guys....I'm tired and can't mentally process at the moment.

For calculatios, figure the car is a 2011 model and the sale price is $22500. I'm buying through an individual, not a dealer.

Thanks!

[RxCritical]

It's been 4 years since I bought a used car and I have forgotten how this works. To add a kink to it - the car I'm lookig at is in Virginia. So do I pay sale tax in TN, or Virginia, or both? Can anyone breakdown/calculate what it will cost?
Tennessee tax will be approximately 8.5% since it has a graduated rate (something like 9.25 on the first $3000 then 8% or so on the rest) 8.5 is a good guestimate. You will pay taxes on the full purchase price you paid for it unless you trade something in at a dealer which subtracts the trade in allowance from the taxable amount. If you are buying it from a individual you will pay the taxes when you go to register the car for tags.

Also, is there any advantage to taxes buying used vs. new (minus the new having a higher price)? Meaning, is the tax % lower on a used car vs. used, or is it all the same?
No advantage, in Tenn the tax applies to the full purchase price, ie what the seller wrote on the title/bill of sale as the purchase price. They(County Clerks who collect the tax) also compare the purchase price to the fair market value to determine if the selling price was reasonable. (ie the dude didn't put $1000 on a $20000 car to reduce the taxes
If a car is sold 5 times, is there sales tax each of those 5 transactions? (I thought I remembered that items can only be taxed one time, and it's taxed to the end user - so establishments like 3rd party distributors don't pay the tax, but rather pass it along to the end user).
It doesn't matter how many times it's sold, the tax is paid when you go to register it.

School me car guys....I'm tired and can't mentally process at the moment.

For calculatios, figure the car is a 2011 model and the sale price is $22500. I'm buying through an individual, not a dealer.
Figure roughly $1900 or so you will have to pay when registering it.

Thanks!

Remember you will need the title to register it unless you are getting it financed then you will need at least a bill of sale. So if the seller has to pay off the loan you won't get the title right away. Call your county clerk to find out exactly what they will want.

Good Luck!
Paul

[GaryM]

The car only gets taxed in the state you buy it in. TN is about 10%, so on your 22500 car, you would pay 2250 in tax when you get your tag which is an additional 65$.

The car gets taxed each time it's sold, not just once.

Some sellers will put a lower amount in the sale price to reduce the tax about... But that is illegal and i would never recommend that!

As for financing, if you need a loan for it you have to go to the bank and tell them what you are buying. They will put a chunk of money in your account and you can go write the seller a check and drive off. You'll have to take the title to the bank asap. If you are not a frequent customer at the bank they may require the seller to meet at the bank and transfer the title before giving you money.

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[Crash477]

Tax rate for TN for both new and used is 7% of the purchase price before tag and title fees.

[RxCritical]

Here is the real deal on the taxes. From the Knox County Clerk's website.

Sales Tax
■ State Sales Tax is 7% of purchase price less total value of trade in.


■Local Sales Tax is 2.25% of the first $1,600. This amount is never to exceed $36.00. For
purchases in excess of $1,600, an additional state tax of 2.75% is added up to a
maximum of $44.


■Local collection fee is $1

So your $22500 car sales taxes should be somewhere around $1575 plus $36 plus $44 for a total of around $1655.
Then add $71 for title and plate fees for a grand total of $1726
You will pay this when you go to register the car at the County Clerk's office.

So I was a little overly pessimistic. I try to be when I am buying a car that way I am not disappointed.

YMMV

[disneyd]

Also find out if you need to get the signed title notarized. TN is not a notary state, but VA may be and sometimes TN will balk if the title is from a notary state and it is supposed to be notarized (sometimes they don't care, I've seen both).

I'm pretty sure you'll have to pay the sales tax in TN when you register the car here, especially when you buy from an individual.

Your best bet is to call the DMV in TN, tell them what you plan to do, and they'll give you the info you need.

[whenry]

All of this can vary depending on who is the title clerk that you deal with on the day of registration. They will look up the car's value and compare it to the purchase price. Even if you got the steal of the decade, you may be paying full tax on the value, not the purchase price. This used to be a loophole but the Anderson County mayor lost his job and got indicted for substantially undervaluing the vehicle. You dont want the same thing happening to you for a few hundred dollars. Again I say "may" because it is a subjective determination so be polite and courteous to the clerk. There is obviously more subjectivity in older vehicles.

[Pewter Sonoma]

Thanks everyone. I'll see the car on Thursday while driving through for a wedding. If I don't like it, then it's not even an issue.

The car only gets taxed in the state you buy it in.

Everyone is saying I pay TN taxes, but you lead me to believe I would pay in Virginia. It's TN, correct?

[GaryM]

Whoops, meant to say tag it in. Only TN tax.

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[LeadSSled]

Here is the real deal on the taxes. From the Knox County Clerk's website.

Sales Tax
■ State Sales Tax is 7% of purchase price less total value of trade in.


■Local Sales Tax is 2.25% of the first $1,600. This amount is never to exceed $36.00. For
purchases in excess of $1,600, an additional state tax of 2.75% is added up to a
maximum of $44.


■Local collection fee is $1

So your $22500 car sales taxes should be somewhere around $1575 plus $36 plus $44 for a total of around $1655.
Then add $71 for title and plate fees for a grand total of $1726
You will pay this when you go to register the car at the County Clerk's office.

So I was a little overly pessimistic. I try to be when I am buying a car that way I am not disappointed.

YMMV

Over the last 6 weeks, I've bought 2 motorcycles out of state. I hit a deer on the 1st one a week after the purchase and it was totaled, so I had to do it again.

What RxCritical posted is spot on. The only thing that I will add is that if you are buying from an out-of-state dealer that is handling the financing, and the sales tax is included in that financing, then that dealer will collect the sales tax. If you are a cash buyer, or bringing a check from your bank (to the seller you are still a cash buyer), then you pay the taxes yourself when you geister the vehicle. Some banks/credit unions will collect the tax and title fees from you and handle that for you. That is what Enrichment FCU did for me on both of the bike loans.

[TedV]

And they definitely will look up the blue book value of a vehicle. When I tagged the 2007 BMW F650GS Dakar, the clerk missed the word "motorcycle" on the title. All she saw was the year and no way a non salvage BMW auto could be that cheap. For 10 to 15 minutes she pounded away on her computer with an air of smug pissed off "I'm gonna nail your azz" satisfaction. She couldn't find the value of the bike in the auto section. When I pointed out the title said motorcycle she passed me off to someone else.

[Pewter Sonoma]

Ugh....I forgot how much taxes are on a car. Not cool.

The fact that if a car is sold 5 times, and tax is paid on it 5 times make me scratch my head...I can understand both sides of it, but when you factor in the amount of tax collected over those 5 transactions, it's a substantial amount!

Say a car is sold new at 30K, then again used at 20K, 14K, 9K, 4K....the taxes are then $2100, 1400, 980, 630, 280, or a grand total of $5390, or 18% of the original price of the car. That's a lot!

Now when I look at people who trade out cars on a regular basis, I will be sure to look at them with a crazy stare.

I guess it's hard for me to wrap my mind around too, since my wifes car is 15 years old, she's had it for 12 of those years, and is worth about what I will pay on taxes for the vehicle she replaces it with. That's the hard part to swallow.

[GaryM]

Hey, atleast once you are done after that. In some places such as NC you pay taxes on vehicles yearly. A lower rate... but still.

[LeadSSled]

Now when I look at people who trade out cars on a regular basis, I will be sure to look at them with a crazy stare.

FYI - If you TRADE a car for another one, the buyer only pays tax on the difference between the purchase price and the trade in value. If you pay $15K for a car and they give you $10K trade in on the old one, then you only pay sales tax on the $5K difference. But oif you sell your car separately, then take the money and buy the new car outright, you have to pay tax on the entire purchase price.

[Pewter Sonoma]

Now when I look at people who trade out cars on a regular basis, I will be sure to look at them with a crazy stare.

FYI - If you TRADE a car for another one, the buyer only pays tax on the difference between the purchase price and the trade in value. If you pay $15K for a car and they give you $10K trade in on the old one, then you only pay sales tax on the $5K difference. But oif you sell your car separately, then take the money and buy the new car outright, you have to pay tax on the entire purchase price.

True, and I should have shown that in the example above. However, in my case, the amount they would give me in trade in wouldn't even cover the taxes, lol.