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  1. #1
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    jinman's Avatar
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    Default So, I bought this little Honda Accord...

    ...from my neighbor. It has about 330,000 miles and runs like a top. It's also very nice inside and out, but she thought it had a blown headgasket. I found a pinhole leak in the heater hose and fixed it for her, but alas, she had lost confidence in the car and wanted to get rid of it.

    So, I offer her $1500 for it. She is excited and so am I because it's a great little commuter car that gets nearly 30 mpg. It will be much cheaper transportation than my 3/4 ton Dodge Cummins Diesel.

    I have all the documents needed to transfer title in Texas. So, yesterday morning I gave my wife $150 and ask her to stop by the tax office. Texas has a 6.5% sales tax on vehicles, so that is about $93.75, right? WRONG!

    When my wife went in, they said that 80% of the book value of the car was $2200 and the sales tax would be $137.50. It does not matter that I have proof that I paid $1500 or even that the car is running. The tax is now assessed on the book value rather than the actual cost. I somehow missed the change in the law. I don't like it. They say this will keep people from claiming they paid very little for a car to avoid taxes. I say it will make a lot of people not file for a new title at all. You don't need a title to register or insure a car in Texas.

    What do you think? I know the reasoning (or lack of it) that this will make more money for the state. Do you agree, or do you think more people will just avoid the title transfer?

    I don't want this to be a political discussion. It's just a "them against us" issue in my opinion that targets honest folks in the middle class who try to do things right. Okay...rant over.
    Jim


  2. #2
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    Default Re: So, I bought this little Honda Accord...

    Jim, I remember hearing something about the law changing. I never heard the specifics. I have to say I done care much for it. Problem is, does the state use wholesale or retail book value, good or poor condition book value. Do you know?

    James

    "Experience is something you don't get until just after you need it."

  3. #3
    Advertiser kennyd's Avatar
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    Default Re: So, I bought this little Honda Accord...

    That is the way the law here is Maryland, UNLESS you have a notarized bill of sale.
    KennyD
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  4. #4
    Elite Member AlanB's Avatar
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    Default Re: So, I bought this little Honda Accord...

    I hate stuff like that. At that point, if it is worth that, then they should be forced to buy it from you at that price is my opinion.

    I should be charged tax on what I paid, nothing more nothing less. To make me pay more because someone else is cheating them, drives me nuts.

    Oh, and here in TN you have to bring in a letter that they provide stating why it was sold under book value, and then it is ok.

  5. #5
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    Default Re: So, I bought this little Honda Accord...

    Quote Originally Posted by MF1455v
    Jim, I remember hearing something about the law changing. I never heard the specifics. I have to say I done care much for it. Problem is, does the state use wholesale or retail book value, good or poor condition book value. Do you know?
    James, it seems they take the "middle" of the book value range. So if the book says the car is worth $2000 - $2500, they would take 80% of $2250. I find it amazing that my sales tax is based on somebody at NADA setting a book value. This little car I bought is a 1992 Honda Accord EX with 330k miles. The book value of the car is $2750. The clerk at the tax office told my wife it didn't matter if the car was running or even if it had a motor. That was the price they would base taxes on. Of course, if you are a junkyard, you are a reseller and you could buy that same "no engine" car and only have to pay sales tax based on the price of the parts you sold off of it. Hmm...

    kennyd: We didn't have a bill of sale, but we did offer to show them the cancelled check...didn't matter.

    AlanB: I feel exactly the same as you do. The people who abide by the law get penalized because of those who cheat the system. That just means the cheaters will continue to find other ways around the laws. Of course, this is true in many other ways than just my simplistic sales tax issue.
    Jim


  6. #6
    Elite Member hazmat's Avatar
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    Default Re: So, I bought this little Honda Accord...

    Jim,

    First I moved this thread - thought it was a better fit in "Related Topics" -

    Anyway,

    MA does the same thing unless you are a "registered" new/used car dealer (who can generally issue you plates as well).

    I understand your frustration, but if you look at it at a macro level, the "system" is easier and genrerally "fairer" for the state. No need to verify actual sales price, just look it up in the 'puter.

    Count your blessings that you picked up the car for $700 less that you "should have" (not that I've ever been able to sell a car for "book value") but you get to pay $43.75 for the privilage.

    What I find more shocking is that you don't need a title to register the car. In MA you need to title it and insure it (mandatory ins) before they will issue a plate.
    Hazmat

  7. #7
    Elite Member hazmat's Avatar
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    Default Re: So, I bought this little Honda Accord...

    Forgot to mention, but I average 30-31 mpg mixed driving in my 2005 accord and can do even better on the highway. I'd think you'd do better with the older model - (smaller, less HP?) If not, I'm happy that the Honda engineers have been able to offer more car fort the same milage.
    Hazmat

  8. #8
    Veteran Member scesnick's Avatar
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    Default Re: So, I bought this little Honda Accord...

    The state of Md. Tried that also a few years back. . Now if you have notorized documentation of the actual price you paid, they will go with that price. I also just bought a 1994 Accord "commuter car" to replace my Cummins Diesel..
    Father, GNCC racer, KTM rider, Bow hunter, Farm owner.
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  9. #9
    Epic Contributor Bird's Avatar
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    Default Re: So, I bought this little Honda Accord...

    For many years, people have cheated on the sales tax by claiming to have paid considerably less than they actually did on individual sales. Even though it was a criminal offense on the part of both the seller and the buyer to report a sales price lower than the actual, there was no way to prove it if they both stuck with the same amount, and of course, it wasn't worth a district attorney's time to even attempt to prosecute.

    So the State of Texas came up with a solution. It may not be a good one or a fair one, but it gets the money, and that was the whole idea.
    Bird

  10. #10
    Veteran Member DUMBDOG's Avatar
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    Default Re: So, I bought this little Honda Accord...

    In my former life in business, we had a customer that was nailed for misrepresenting the price he had paid on vehicles. My former partner, who was a snake anyway, purchased an expensive boat motor and used our sales tax permit saying it was for resale. We were audited due to this and had to pay the tax on his motor. We did charge it back to him.

    The point being is that cheating is widespread in the system, seems the more money that you have, the more widespread it is. The guy without is much is more honest.

    That is why states are going to the system where they charge you based upon some arbitrary value. It keeps all the people honest, even if some have to pay more for the dishonest. Even if it costs me more sometimes, I realize that it means that all the people are getting theirs also.

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