MellamoPOUND

Hey, I am getting closer to buying the 4runner I found, and the lady still wants to buy mine. What would be the best way to go about this? Should we just trade titles then I pay the difference? Would this mean we wouldnt have to pay taxes?

shazaam

you sign over the titles to each other, you give her the check ... and the last part is just dumb .... of course you both have to pay taxes, and register the vehicles in your names.

miked

Make sure you do a bill of sale for each end and state exactly what was done in the transaction. Also, have both parties sign and date it.

MellamoPOUND

hahaha, yea i figured we would have to pay taxes, i was just wondering if we traded vehicles then how would the tax come about. Thanks!

SLC Punk

I think the state will assign a value to the vehicles.

Astralplane

You will pay taxes based on the bill of sale. That's why people pay some of purchase price in cash, under the table, to lower the sales tax.

MellamoPOUND

yea, so if we were just trading the titles, on the bill of sale we could just write the price of the vehicles around like 10k and I will just pay her the difference in price as if we were selling each other the vehicles at the price we normally would have. I think.... I dunno much about this kinda stuff as you can probably tell.

shazaam

say market value on yur car is $10,000 on the bill of sale (notarized) you write in $8500-9000 and that is what she pays taxes on

Market value on her truck is $15,000, you write in $12,000 on the bill of sale (notarized) and you pay taxes on $12K

This is lying .. the difference in price isn't that much ... not worht getting caught .. and if you go too low, you set off red flags.

MellamoPOUND

cool, thanks for your help!

Astralplane

I think a trip to library might be a good thing or a simple coversation with an accountant.
Also in my state you only pay sales tax on the difference.
i.e. You buy a car for $20,000 and your trade in is worth $10,000, you pay tax on $10,000.

MellamoPOUND

wow, that would be awesome. Does anyone know if that is the same in Colorado?

Joec500

I know in Washington there is a clause for market value +- 2000 dollars, because maybe the car needs work etc etc. So what I did for market value was Low BlueBook then subtracted around 2,000 so I didnt lie and was within the values stated by the law.

I think it sucks that you are taxed on a car that has already been taxed on.


my .02

Joe

miked

I think trade-in laws are the same everywhere. you only pay the difference of what you pay for the new car. I don't know if that applies to private trades also. I would assume it does.

User 051420

When I transfered owners on my car I wrote GIFT under purchase price, then just paid the $15 transfer fee. No tax.. I dont wanna goto jail, so dont tell anybody!