I find myself in the unique situation of being both in the market for a new car and readying for a move from Connecticut to North Carolina, where I will stay for a year and then likely move back to Connecticut. Recently, I began to wonder if it would be cheaper overall for me to buy the car in NC, where the state sales tax is about 2% less than CT. This will not be an out-of-state purchase, as I will be a resident of whichever state I decide to buy the car in. Other than sales tax, are there any other factors I should be considering? Does it actually make a difference?
Couple of things to consider…
I think NC still has ad valorem tax on cars…you will have to pay personal property tax on the value of your new car. This could be hundreds of dollars. If you didn’t license your car in NC, you can avoid this.
Also, car will vary in price depending on where you buy it…this is because of the distributers. I can say this for Toyota…Southeast Toyota adds stuff to most of their cars before sending them to the dealers…stuff you may not want or need.
States vary on how they treat sales taxes…some charge sales tax based on the difference between the price of your new car and the trade amount (or value) of your old ride. Check to see if this works for or against you.
Also, NC used to limit total sales tax on cars. When I lived there years ago, it was $1000. i.e., even if you bought a $50k car, the sales tax was $1,000. That was the offset to the ad valorem tax.
Check to for when you return to CT…they may charge you the tax difference if you own the new car for less than a certain period. I seem to remember that some states used to do this.
Research the car registration process in NC. If you bring in a car as a new resident you have to pay a lot of money when you register your car(s) even if you have owned them for years before moving into NC. My guess is you are better off moving to NC without a car and buying one in NC. That way you only pay the “sales tax” once. If you buy in CT and then move to NC; in effect you’ll pay the sales tax twice. I’m not real sure about this, but my son lives in NC and I think I have it right.
I was looking at a 2012 Ford Expedition…not to buy at this time, just to see what the interior is like and prices because in a couple of years I’d like to buy a bigger SUV because I live in rural Nevada, I like to go camping, hunting, and other outdoorsy stuff and I can’t take my little car out to all the places I like to go and I decided to look up prices of Expedition 4x4’s in other states and found that in South Carolina, an Expedition would be about 8K less than it would be in Nevada.
Another thing to remember, though, is that most states have laws mandating that you register a vehicle with them within a certain number of days (typically 30) of moving to the state. Unless the OP maintains a residence in CT and can prove that the relocation is only temporary, they would likely be violating the law if they didn’t register the vehicle in NC.
Thank you all for your replies. I have done some additional research as suggested.
@UncleTurbo, you are (mostly) right. In NC, you pay a 3% “highway use tax” to the DMV when you register the car; in CT, you pay a 6% sales tax to the dealer when you buy the car. As far as I can tell, the highway use tax is in lieu of (not in addition to) the state sales tax. This goes to your point that buying the car in NC is the better deal. As to whether this is “a lot of money,” it’s true that the total cost of registration ends up being higher in NC vs. CT, but I think the lack of sales tax on the car itself more than makes up for it. (See full list of fees at http://www.ncdot.gov/dmv/vehicle/title/)
@KeyWestOasis, as far as I can tell CT does not charge any sales tax at time of registration. Both CT and NC have property tax on cars which is paid to the county of residence, but it’s possible that not all counties charge this tax.
@katidid79, where did you look to compare prices across states?
@eraser1998, just to close the loop on this: I will not be maintaining my CT residence, so I will need to get licensed and registered in NC even though it’s just for 1 year.
Micmarc…I looked at Dealerships’ Websites.