n8236

My uncle just recently gave away his car to a distant relative (by marriage) of mine, but my relative is unwilling to put down a price near that of KBB's suggested price. They have chosen to put down $300 instead of KBB's $4,500 to avoid taxes.

What are the repercussions, if any?

onihc

iTrader: (1)

no problem selling any car at $300 dollars.

the car is worth how ever much a person is willing to sell for. KBB is just a general guide to how much a car may be worth.

so if he sells for 300, then its 300. if the person buying the car sells it for more than 300, then that person is on the hook for taxes on the gain.

KBB is not absolute pricing.

n8236

Hm, interesting.

So, what's the purpose of writing down the approximate cost when transferring titles? Does the seller get some sort of tax deduction for that amount?

When I sold my old Acura RSX to a 3rd party, I wrote down the approximate cost of the car at that time. And I believe the buyer gets taxed for that amount?

Good Lord, this thing is confusing.

Ap1_Alan

iTrader: (1)

Buyer has to pay sales tax on the sale price listed. Your relative is just trying to save a few hundred dollars.

There are no repercussions for the seller. If the DMV thinks something shady is going on they'll just tax your distant relative on the KBB value

n8236

Gotcha! That's exactly the answer I was looking for. Thank you!

rominl

iTrader: (4)

and i hope they are aaa member so you can do the transfer of title at aaa. much easier, less hassle

sc-driver

iTrader: (7)

if the car was "given away" then it is considered a gift and since it was not an immediate family member then it was a private party gift.

This means your relative doesn't need to pay the sales tax. But when transferring the title, you should put down how much was payed, not the KBB value.

It's in other states, I think New York, that if you put the value is below KBB then they may tax you the difference.

I know it sounds a bit confusing, but if you need more help or explanation feel free to send me a message. I recently dealt with a handful of dmv title transfers.

greg0126

iTrader: (2)

Nothing is wrong with it. My grandfather sold a car to my father for something like $10 once. Though that was a few years ago and I'm sure the government has or is looking into a way to stop that.

blacksc400

iTrader: (4)

We don't pay sales tax on private party car sales anymore here in Nevada. But before when we did, we had to either get an appraisal from DMV for the value of the car, or do as a gift to avoid tax.

rominl

iTrader: (4)

yeah private car sales makes a lot more sense in NV. i can never understand the system here in CA (for example)

IXI187IXI

iTrader: (3)

yup if its free you can say it was a gift but usually they get fishy about that sometimes and it raises more questions. anytime i sell a car i usually tell the buyer (in order to help them out) to say i sold them the car for 300 bucks to help them save on paying taxes.