Buying a New Car out of state


#1

If I purchase a new car out of my home state of New Jersey, will I be paying sales tax in the state I purchased the car or do i pay Jersey Tax? Just wondering, thanks


#2

Usually, you pay the sales tax when/where you get the title and registration. Dealers near state borders are used to handling this situation.


#3

Everyone in the east is near at least two or three state borders.

Normally you pay the sales tax when/where you register the car.


#4

Yeah, check with the dealer (if the seller is indeed a dealer). They know about these things and can advise you, help you with some paperwork.


#5

I strongly suggest that you start with your home state Department of Taxation. Get the information from the one informed source. There are 50 states and many slight variations of the law. Find out what your home state says first. Then check with the state in which you will be buying the car. Get the facts first. Don’t let the dealer tell you want he thinks it is. Likely he knows and will tell you the truth, but if he lies or is wrong, YOU pay the price.

You likely can find the information on the Web, but I do suggest talking to a real tax agent. They can help you avoid problems.


#6

Sales tax applies to state where the car is going to be registered.

The consumer protection laws are very specific state by state so it may be very advantageous to purchase in state if possible in the unlikely case problems arise.


#7

Andrewj, your statement is not always true.

I will use Kansas law as my example. Sales tax on a dealer-purchassed car in Kansas gets paid to the dealer at time and location of purchase, collected as part of the bill of sale. It becomes revenue to the state and county of sale, not registration. An adjustment is made at time of registration, and the county of registration may also levy additional sales tax, if the amount paid already falls short of what would have been levied if the sale had been made inside the county. No refunds if the tax rate is lower.

In Missouri, what you describe is true. Missouri allows you to transport the car anywhere to register and sales tax is paid at that time, in-state or out-state. The anomalies of these two laws make it somewhat cheaper for me to purchase a vehicle in Missouri and register and pay sales tax on it in my home county in Kansas, as compared to purchasing a vehicle anywhere in Kansas. The key factor is that my county has one of the lowest overall state/county combined sales tax rates in Kansas and I do not live inside a city with a city sales tax.

Bottom line: Find out what the laws and policies from the taxing authorities before your purchase, and make your decisons accordingly.


#8

Jawhawkroy is correct. You also need to deal with the other issues like emissions, vin inspections, etc if you buy a car out of your county / area / state so best to ask questions of both states before you get into any problems.