_Remi

Hi friends,

Sorry but I don't really now where to ask the question...

I am planning to swap my car for a Mustang, both cars have a market value of $12k, do we need to pay used taxes on these cars?

Thanks!

TexasAxMan

Not sure about cali, but in Texas you don't. You can probably each claim the car was a gift from the other .....

mortman

Remi,
In cali you will pay tax on the purchase price (not value) of the new vehicle not the selling, that's the buyers problem.

PonymanB

just gift it or transfer ownership. There may be some paperwork for transfer but no tax (maybe)

cprstreetmachines

Yep, believe you get bent over on that one. Pay the man. DMV will know for sure though.

Starfury

Like Mortman said, the DMV charges tax on the purchase price, and you'll need to pay this when you register the car under your name. "Gifting" the cars to each other may look sketchy to the DMV, especially if the two parties aren't related. I wouldn't do it.

Simply write receipts to each other for low dollar amounts (say $500) and it won't really be an issue.

rwh129

Like they said DMV will tax ya 1 way or another on everything.

TexasAxMan

What would happen if you bought a new car and traded in your old one? Seems they would only tax you on the net. At least that's what they do in Texas. If they do, then your net purchase price would be zero. I can see there being a title transfer fee or something like that, but to tax you is punative.

Thank God I live in Texas!!!!!!

Derf00

Should be able to do a title exchange in CA without any problems (taxes) I would think.

In AZ private party sales do no have to pay sales tax.

As for new car sales with trade-ins, in AZ you pay sales tax on the Gross sale (before trade-in) so it's always best to sell your car private party and use that money as a down payment. The down payment gets applied before the sales tax so you save money in taxes.

However, any sales taxes you pay on a new car purchase are deductible when you file you AZ state taxes

1971mach1

Not in Calif,
In CA use tax is paid by the buyer on the value of the car that is stated on the Bill of Sale form signed by the seller. Unlike Texas or AZ this value would include a down or trade in. The value would be the market value if there is no cash exchanged. In a swap, each car is a separate transaction, with separate
paperwork. No difference if the seller got cash, another car, furniture, etc the dollar value goes on the Bill of Sale.
Starfury has the right idea, a 40 year old Ford would believably only have a value of $500. If the car you're trading is new enough to be in the blue book though, a very low value might raise a flag.