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      11-14-2012, 09:43 PM   #1
e90_will
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How do you trade a car with someone?

Hey I know the process of selling a car, but what about trading?
Im interested in someone elses car and am still debating if I should trade or not, but how is the process done? Do I have to just sell my car to him, and he sells his to me? Thanks for the input in advance.
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      11-14-2012, 09:46 PM   #2
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Sign your title over to him and make him sign over his title to you. Not rocket science.
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      11-14-2012, 09:52 PM   #3
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When you sign it over you dont get taxed on anything cause it wasnt a sale? The main reason is to avoid a sales tax, cause we arent essentially selling the car.

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      11-14-2012, 10:00 PM   #4
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Originally Posted by e90_will View Post
When you sign it over you dont get taxed on anything cause it wasnt a sale? The main reason is to avoid a sales tax, cause we arent essentially selling the car.
Contact the local DMV, I think since it's an even trade you don't get taxed because you've already been taxed.
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      11-14-2012, 10:24 PM   #5
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Depends on the state. Here its 15k or more. So when my buddy picked up a 20k+ M3 the seller wrote it as 14,500 but he really got the actual money.
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      11-14-2012, 10:30 PM   #6
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Originally Posted by ihsanshaik View Post
Depends on the state. Here its 15k or more. So when my buddy picked up a 20k+ M3 the seller wrote it as 14,500 but he really got the actual money.
Hmm.. arent there issues with transferring a title when the other party member isnt family? Or are you able to just transfer it as a "gift" so that taxes are not required. I read somewhere if you dont, then they tax you off KBB value of the car. Ill most likely just give DMV a call.
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      11-14-2012, 10:32 PM   #7
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Depends on the state. Here its 15k or more. So when my buddy picked up a 20k+ M3 the seller wrote it as 14,500 but he really got the actual money.
Leave it to Illinois to tax everything lol.

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Check local DMV.

Do it at a notary if possible, just in case.
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      11-15-2012, 08:22 AM   #8
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Yup, depends on where you live. In NY its as easy as one signature, but you will pay the taxes on the value of the car.
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      11-15-2012, 02:11 PM   #9
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Yup, depends on where you live. In NY its as easy as one signature, but you will pay the taxes on the value of the car.
Same thing in MD - you pay tax when you register the car. And if you buy from a dealer, the sales tax is only paid on the difference between the new car price and the trade in value - but the dealer handles the transaction and collects the tax.

I suspect that by trading, both the OP and the other party will pay full sales tax according to how the state values each car upon registration.

Tom
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      11-15-2012, 02:57 PM   #10
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Originally Posted by Tom K. View Post
Same thing in MD - you pay tax when you register the car. And if you buy from a dealer, the sales tax is only paid on the difference between the new car price and the trade in value - but the dealer handles the transaction and collects the tax.

I suspect that by trading, both the OP and the other party will pay full sales tax according to how the state values each car upon registration.

Tom
Not if a bill of sale is involved that states that both cars were traded as equal value.

But like I said, OP should contact the Local DMV as each DMV is different.
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      11-15-2012, 06:13 PM   #11
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Originally Posted by e90_will View Post
Hey I know the process of selling a car, but what about trading?
Im interested in someone elses car and am still debating if I should trade or not, but how is the process done? Do I have to just sell my car to him, and he sells his to me? Thanks for the input in advance.
In CA, if you are not related to the other vehicle owner, then the transaction is considered a regular transfer and you will have to pay sales tax on the market value of the car your trading for. In addition, depending on the age of your car, you may have to get a smog certificate.

This is from the DMV site:
There are three primary differences between regular transfers and family member transfers:

1. A regular transfer requires smog certification in most cases before the vehicle can be registered in the new owner's name. A family member transfer does not require smog certification (See Smog Certification section) if the vehicle is currently registered and the biennial smog inspection is not due.

2. On a regular transfer, use tax based on the purchase price of the vehicle is due at the time of transfer. A family transfer is exempt from use tax with the exception of a transfer between siblings who are not minors. Transfers between siblings are exempt from smog certification regardless of age, unless a biennial smog is required.


3. A regular transfer requires the department to reestablish the vehicle value (reclassify) to determine the appropriate Vehicle License Fee due. The license fee is based on the purchase price or current market value of the vehicle. A transfer between family members is exempt from reclassification of the vehicle value.

To establish eligibility for the use tax or reclassification exemption, be sure to let the department know that this is a family member transfer.

A "family transfer" is when ownership is transferred to or from a:
spouse
parent
child
grandparent
grandchild
siblings
domestic partner
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      11-15-2012, 06:26 PM   #12
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Originally Posted by nbkkvv5 View Post
In CA, if you are not related to the other vehicle owner, then the transaction is considered a regular transfer and you will have to pay sales tax on the market value of the car your trading for. In addition, depending on the age of your car, you may have to get a smog certificate.

This is from the DMV site:
There are three primary differences between regular transfers and family member transfers:

1. A regular transfer requires smog certification in most cases before the vehicle can be registered in the new owner's name. A family member transfer does not require smog certification (See Smog Certification section) if the vehicle is currently registered and the biennial smog inspection is not due.

2. On a regular transfer, use tax based on the purchase price of the vehicle is due at the time of transfer. A family transfer is exempt from use tax with the exception of a transfer between siblings who are not minors. Transfers between siblings are exempt from smog certification regardless of age, unless a biennial smog is required.


3. A regular transfer requires the department to reestablish the vehicle value (reclassify) to determine the appropriate Vehicle License Fee due. The license fee is based on the purchase price or current market value of the vehicle. A transfer between family members is exempt from reclassification of the vehicle value.

To establish eligibility for the use tax or reclassification exemption, be sure to let the department know that this is a family member transfer.

A "family transfer" is when ownership is transferred to or from a:
spouse
parent
child
grandparent
grandchild
siblings
domestic partner
Thanks for the info. So I guess theres no way to avoid a sales tax when trading with a non-family member.
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      11-15-2012, 06:31 PM   #13
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Thanks for the info. So I guess theres no way to avoid a sales tax when trading with a non-family member.
You got that right. Ca tax man wants their cut of the action.
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      11-15-2012, 06:34 PM   #14
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You got that right. Ca tax man wants their cut of the action.
Yeah I guess its cheaper to just say you sold the car then, rather than having them tax you on the marketed value.
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      11-15-2012, 06:43 PM   #15
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In NY, you can fill out the bill of sales as gifts to avoid paying taxes. I guess it varies by state.
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      11-15-2012, 09:13 PM   #16
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In NY, you can fill out the bill of sales as gifts to avoid paying taxes. I guess it varies by state.
CA does allow a transfer under "gift" and there is no use tax applied. However, in the "statement of facts" form that must be filled out and provided to the DMV, the Gift Box has the following statement:
"(Does not include vehicles traded between individuals, transfer of contracts or other valuable consideration)"

I suppose two individuals could try to gift each other their cars to avoid paying use tax but it is clearly a violation of CA law. As such, I would advise against doing that.
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      11-15-2012, 11:55 PM   #17
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Originally Posted by nbkkvv5 View Post
CA does allow a transfer under "gift" and there is no use tax applied. However, in the "statement of facts" form that must be filled out and provided to the DMV, the Gift Box has the following statement:
"(Does not include vehicles traded between individuals, transfer of contracts or other valuable consideration)"

I suppose two individuals could try to gift each other their cars to avoid paying use tax but it is clearly a violation of CA law. As such, I would advise against doing that.
I read somewhere that if you gift a vehicle then they tax you according to the market value of the car, or the kbb value?
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      11-16-2012, 10:12 AM   #18
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Originally Posted by e90_will View Post
Thanks for the info. So I guess theres no way to avoid a sales tax when trading with a non-family member.
Write on both titles that each car was purchased for ~ $1000. Then you pay taxes off of that, which is a lot better then paying off of 15K.
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      11-16-2012, 10:21 AM   #19
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Originally Posted by e90_will View Post
I read somewhere that if you gift a vehicle then they tax you according to the market value of the car, or the kbb value?
This link should answer your questions regarding gifts:
http://www.dmv.ca.gov/pubs/brochures/howto/htvr3.htm
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      11-16-2012, 06:27 PM   #20
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Write on both titles that each car was purchased for ~ $1000. Then you pay taxes off of that, which is a lot better then paying off of 15K.
How strick are they on this? I was going to just put a selling price, but do they regulate this at all when you put an extremely low number?
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      11-16-2012, 08:37 PM   #21
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They watch the selling price.
They will send you a bill for the additional if the sale price is well be low market value.
Otherwise you must justify it by showing pictures or receipts of mechanical work.
Price is at the bottom of KBB or get dinged.
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      11-16-2012, 08:54 PM   #22
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How strick are they on this? I was going to just put a selling price, but do they regulate this at all when you put an extremely low number?
As long as you and the other guy keep your stories strait, you're fine. But most of the time they don't question it. (done it a few times, no one questioned anything.)
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