Even trade on cars = no sales tax?

@ a dealership it should equal no sales tax, but i don't know about private sales.

I once purchased the car from a friend, and he wrote it down as a gift and i paid nothing as far as tax. Cheating...i know ,but i was really low in $$ and $600+ tax is no small change for a high school student. It was a while back, and i don't really recall, but we had to sign an affidavit i believe. So i assume the same will hold true for you.

 

In CA you have to declare the fair value of the gift - not sure how that works out, but you don't get to pay use tax on $0.

Unless you're an approved charity, I'd really check the law before you assume no taxes.

 

See if they will say you paid something like 500 dollars for the car and see if you can get taxed for that instead of the actual value of the car. I've done that in the past.

 

Here's the last thing I would ever do in the world...

declare something pseudo-reasonable, like $1,000, and pay $50 tax on that. If the clerk raises an eyebrow just say "Yeah, friend of the family cut me a deal." That IS fair market value.

 

Not an accountant - however my experience...

If you trade a car for equal value you would not need to pay tax on it.

If your car was 1/2 the value of his - you would only pay tax on the difference.

Get a Bill of sale which shows the trade and difference (zero in this case) spell it out on your Bill of Sale clearly. When you go to title/register the car -present the bill of sale and they will not even bat an eye.

You would do 2 Bill of Sales (one for you and one for him) - yours would look like this -

1. Make, Model and Year of his car
2. Sale price of his car
3. Make, Model and year of your car
4. Trade in price
5. Net difference

His name, phone and address, date, etc.

I have done this in Ohio - I assume it would be the same for WI - since they tax in similar ways.

The only time you could get dinged. If his car is worth say 50K and yours is worth 20K and you "claim" it was an even trade.. If the book value of the cars are very far apart - you might get a few eyebrows raised that you are trying to skirt paying taxes. If the cars are truely an even trade or close to book value wise - not a problem.

Rich

 

In Nevada DMV charges amount based on depreciated MSRP (a book is consulted, and if not listed then they use MSRP and a declining percentage based on year). A lot of Nevada DMV laws come from California, so I wouldn't be suprised if it existed there too. :-(