Buying a Used Car from a Relative (tax question)

You don’t have to pay sales taxes on a car that you buy from your dad correct? Is this a national law or a state law? What if you bought a car from your dad who lives in another state (OK to TX)?

You better check the laws in your state. Don’t assume anything.

There is no national law. What you need to find out is if the state that you will register the vehicle in, after is is sold to you, requires sales tax to be paid, or not. The key is where you as buyer will register the car. I assume that is Texas, based on your note, so contact Texas DMV to find out if purchasing from a relative is a taxable event in Texas.

Google your local DMV, You can probably find the answer on line.

Sales tax has to be paid. It would be a crazy state that had separate laws for family sales.

It depends on the state(s) involved. Call your local state tax offices. There may be an agreement between the states that dictates how or if any tax is collected. In any case it is NOT a national issue, it is controlled by the states.

The state is going to get theirs on any vehicle transaction no matter what if there is a title change. The only question will be if it is called sales tax, excise tax, or whatever.

A look at TX shows they require a vehicle inspection first, a per county fee (5-15 dollars) which varies, title application fee of 28-33 dollars, and since it sounds like you’re changing an OK title to a TX one this probably means a 90 dollar new resident fee on top of the yearly registration fee which will be about 40-60 a year depending.
Oklahoma sucks too.

Just a further note. Here in OK I’ve been involved with several inter-family vehicle changes in which the vehicles were given to someone completely free of charge and when that title is changed the registration, excise taxes, and licensing fees are charged just like they would be if someone bought the car off the car lot.

This is true for my state (NC) if the car is a gift to a relative. I’ve done it. But if it were a true sale, then sales tax applies. You need to check with your own state’s DMV.

Sales tax is STATE laws…NOT federal.

You need to check with your DMV. Some ways around it is to have your Dad write out a receipt for $1. HOWEVER…Many states don’t allow this. The tax is based on the VALUE of the vehicle or the salesprice…whichever is higher. NY use to allow this some 30 years ago…but not anymore.

In the state I live in the state specifically exempts private sales from sales tax. However, all the other fees and taxes apply. Some states have something called an impact fee–charged for bringing a car in from another state. This can be quite high. You will find it all out when you get the car registered.

In 1980, I bought a car from my brother-in-law with a sales slip for $1. He lived in New York, and when I went to register it in Massachusetts, they looked at the sales slip and said I must pay sales tax of…6 CENTS!