Most states in the U.S. impose a sales tax when you buy a new vehicle. However, each state has its own sales tax laws. You may be worried about getting taxed twice or not knowing when and where to pay your vehicle sales tax.
Good news: you’ll only need to pay taxes once when you register the car, and the seller may have already collected and handled the taxes. In any case, when you go to register your vehicle and pay other fees, you can easily pay your taxes at your local motor vehicle department.
But before you buy a car across state lines, make sure you know how to pay the state sales tax properly to avoid penalties and a tax evasion fine. Don’t worry; we’ve got you covered. This article discusses buying a car across state lines and where you pay the sales tax. And if you want to buy a car overseas or need vehicle transport services, why not trust one of the licensed auto importers?
Why buy a Car Out of State
A dealer or owner in another state might be a good option if you are looking for a vintage or rare model, cannot find the features you want at a local seller, or have found a great deal from another seller. For example, different states may value vehicles differently, and the cost also goes up and down depending on regional supply and demand. There are also many benefits to buying a vehicle overseas, and that’s when car importers can be of help. These factors should be weighed against the challenges associated with purchasing an out-of-state vehicle, such as transportation, insurance, inspections, and registration.
Buying a Car Out of State
A dealership from another state may be authorized to collect state sales taxes and send them to your state along with your title and registration papers. Ask the dealer so that you’ll be prepared to pay the amount when you register the car if the dealer cannot pick it up.
Your vehicle’s purchase price will include the tax amount, and any sales tax collected should appear on your bill of sale. This may not mean you have completely met your tax obligations since you may still need to pay local sales taxes in your county when you register the car. You may, however, receive a credit from your state if the dealer calculated higher taxes than you owe.
Whether you buy a car online or in person, you will need to handle taxes, fees, and registration on your own since the individual will not have the authority to do these things. Your state will be able to calculate taxes due properly if the seller provides a bill of sale with the purchase price. You can potentially get a tax exemption if you purchase from an out-of-state family member, although you may need to pay a small fee.
What steps should you take?
The process can be tricky, and complications may come up along the way. Working with professional car importers will save you from the hassle of a paperwork-filled process. If you decide to do it on your own, here’s a breakdown of what you should do:
Getting a vehicle history report
Get a vehicle history report for the car you plan to purchase. In this report, you will learn about red flags that could keep you from buying the car or negatively affect your negotiations. For instance, if the car title has liens, you should pay them before transporting the vehicle back to your home state. You may be held liable for these liens if you fail to do so.
Having an inspection
When buying a used car out of state, have it thoroughly inspected by a mechanic. Select an independent professional rather than one recommended or employed by the dealership. You may ask your local mechanic to handle it if the car is several states away and you cannot travel there.
Paying sales tax
Use vehicle transport services to get your car back home. Your state requires you to pay sales tax on the vehicle once you get it there. Licensed auto importers, tax professionals, or your local department of motor vehicles can typically provide guidance on this issue.
Obtaining required safety and emissions test results
You can also find information on the required inspection tests for your new car at your state’s department of motor vehicles. Depending on state laws, these may include odometer, emissions, and/or safety inspections. You must bring your inspection certification, the sales paperwork, a photo I.D., and proof of address to the DMV after the vehicle has been inspected. These documents will allow you to register and title the vehicle.
Registering the car
Find out how long it takes to register the car in a new state. This step must be completed within 30 days of the purchase, or you may be fined. U.S. car importers may assist you with completing the registration paperwork. You may also need to submit a verification form of vehicle identification number (VIN). Your home state can verify that the vehicle is not stolen using this document.
If If you need a salvage title or another type of non-standard title for the vehicle, check the requirements in your state before finalizing the purchase. Title costs and the amount of time you have after the purchase to obtain the title also differ by state.
Ensuring the car
Your auto insurance policy determines whether you need coverage for a new vehicle before purchasing it or after. Most insurers provide coverage for new auto purchases for a certain period before adding the vehicle to your policy. If your policy doesn’t include this provision, you will need to get it right away. Furthermore, if you are taking out a loan to buy a car, your lender may have specific insurance requirements before your loan can be funded.
The process can be best done by auto importers who know the ins and outs of import laws. Now that we know how it works let’s see how much sales tax you should pay.
Determining Your Vehicle’s Sales Tax
To find out what you owe in cases where you must pay the vehicle sales tax yourself, visit your state’s government website that handles vehicle registration – usually the department of revenue or motor vehicles – for details about state and local tax rates. And if you’re working with licensed car importers, fear not since they will handle this. Taxes are calculated based on your car’s purchase price or value, but the actual rate can vary based on factors such as whether the car is new or used, whether you are a new resident and which county you live in.
Vehicle sales taxes are usually between 1.5 percent and 8 percent, and a minimum charge may apply. However, some states like Alaska, New Hampshire, and Delaware don’t charge sales tax on car purchases in general, while Oregon charges a small use tax just when you buy a car out of state. In addition to any state sales tax, you’ll need to add the county portion, if applicable, to know how much to bring for registration.
Remember that you can usually deduct any rebate or trade-in value the seller applied to your car purchase in the calculation.
Do you need help?
Many complications come along with buying a car from another state. In this case, the best thing you can do is to leave it to the professionals who can handle this complex process for you. Located in Blaine, WA, we are one of the licensed car importers, specializing in auto-import to Canada and U.S. Contact us if you want snowbird car transport Canada.
Contact us now! We are looking forward to hearing from you!
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