[slo_guy]

I apologize in advanced if this is too lengthy...

I have the opportunity to purchase a 335i that is less than a year old for a very good price. The car is actually owned by the bank because it is being financed, and the current owner just wants to pay it off. We would pay the car off and I would assume ownership of the car. My question is...do I still have to pay an additional sales tax (CA--8.25%)?

I'm hoping one of the financing gurus will be able to answer this...

[seanl]

Originally Posted by slo_guy

I apologize in advanced if this is too lengthy...

I have the opportunity to purchase a 335i that is less than a year old for a very good price. The car is actually owned by the bank because it is being financed, and the current owner just wants to pay it off. We would pay the car off and I would assume ownership of the car. My question is...do I still have to pay an additional sales tax (CA--8.25%)?

I'm hoping one of the financing gurus will be able to answer this...

Here in CA you will need to pay sales tax on purchase price, regardless of how the car is financed. So you'll be paying 8.25% on the payoff amount.

That being said, if they payoff amount (your purchase price) is significantly below market value, then CA *may* come back to you--I am not sure on this one and thus we'd need to hear from a real expert on the subject. Does CA care (legally) if the sale price on a vehicle is significantly below fair market value. If so, what are the ramifications? I think this is your question, correct?

It happened to me in Florida back in 2001. I bought a car from a friend for a very good price etc, and since the amount on title was significantly below fair market value, the state sent an inquiry, which both my friend and I had to sign off stating that the sale price on the title was accurate. Relatively easy to resolve in my case.

Good Luck.

[slo_guy]

Sorry for the confusion. Let me try to clarify. When the original owner made the deal, before he actually financed, the tax and license were first calculated, and what he financed were the purchase price plus the tax and license. If I'm assuming the remainder of the loan, do I have to pay an additional 8.25% on top of what's left over?

[seanl]

Yes, you can't just 'assume' his loan in that regard. You are buying a car, and when the DMV receives paperwork the total purchase price must be on it thus you will pay 8.25% sales tax. The loan assumption is separate transaction from the DMV paperwork.

Only immediate family members are exempt from sales tax when vehicle is transferred in name:
http://www.dmv.ca.gov/pubs/brochures/howto/htvr1.htm

Just because he paid tax doesn't mean you don't have to...