Who pays this & how is it paid? Thanks.

Buyer, at the DMV when they transfer the title

Seller, at the time they do their taxes and declare the fortune they made by selling the car as income

I would add that it is important to keep track of the money you have spent on anything you plan on selling and expect/hope to make a profit on. Purchase price plus costs determines the cost basis and lowers the amount of "profit" you have to pay taxes on. That's probably really obvious with real estate, but it also applies to collectibles, such as a vintage automobile. Unfortunately the rules don't allow you to value your own labor, only labor you have paid for. I would guess most people don't actually report any profit on the private sale of a car. Although the IRS does require you to report money made from selling collectibles it doesn't require you to report losses and most car sales are at a loss as most cars depreciate over time. Private party car sales are probably one of those potential sources of income that fly really far below the radar of the IRS. (NB: I am not an accountant or tax professional, so do your own due diligence.)

I wonder how many people actually report a personal car sale (one not sold at a dealer) to the irs.

It is dependent on the state in which is is purchased and what is purchased.

RE: Private sale of a motor vehicle,

In AZ a private sale of an automobile is a non taxable event. This is "Sales Tax" as the OP stated.


In New Mexico, it's a one time 'excise" tax on the sale.


Now...when you go to register the car.....different in all states including CA and AZ. New Mexico it's normally quite low...my MH is $125 a year becuase you paid the excise tax...I think it's 6%.

In CA, I've handled the cash sale (private) as undocumented and a different stated value to the agency to reduce sales tax to the buyer.


The question was about sales tax on a vehicle and not about Federal Income tax.

Virtually no one reports a personal car sale to the IRS or state taxing authority unless it generates a 1099 form because the car was sold through an auction, broker, or other business that issues the 1099. Otherwise, the IRS never knows unless they audit you and go through your bank accounts and evaluate the sources of all deposits made into your bank accounts.

As noted above, in CA the buyer pays the tax and it is 8% if memory serves. It's based on the sales amount written on the pink slip during the transfer process.

Going in and declaring some absurdly low purchase price is over up here. There are guidelines. Simple sale? If you’re off they let you know. If someone ‘gives’ you a car it’s a dif story. Wire transfers are trip hazards.

I wonder how many of us really make money on cars….

Only one time...during the pandemic on a leased car believe it or not.


Leased a Mazda CX 5 for the wife, three years lease with 0 down in 2018. Lease buyout come due in the Summer of 2021 at 18k and change.

Went to purchase another car and the dealer offered a buy of 28k for the leased car, it had low miles. We netted 10k on the deal and applied it to a purchase of a car new car. they excised about a 2k premium on the deal....which was low and right before those charges went bonkers. So an 8k net on the deal. Probably never happen again.

I'm sure there are other stories out there like that for others with used cars. I hadn't spent a penny on that car other than putting gas in it.

I have been talking about this very thing with my wife. thinking about selling my 356 C coupe. I have owned it for 25 years so you know what that means. It's a nice driver, maybe a 10 footer, nothing special but still. she says we must report it. I say don't ask don't tell. what say you guys?
Randy

I paid long term capital gain tax on the sale of my 914-6 M471 that I owned for 15 years.

Private buyers/sellers have many options on how they complete the sale.
Here in Texas low reporting was such a problem that the state went with "Standard Presumptive Value."
You have to pay 6% sales tax on any new or used car sale and if your private you pay 80% of the SPV or what is on the transfer paperwork, whichever is greater.
The State doesn't say anything about the 80% of SPV on its website.
You can go to the Texas DOT SPV calculator.

https://www.txdmv.gov/standard-presumptive-calculator

Plug in a VIN and a mileage and the state will show you what the average price for that vehicle is today...
You want to make sure the purchase price on the transfer form is less than 80% of SPV.

Thank God this only applies to vehicles 24 year old and newer.

If I'm buying something old I might by the car at one price and the wheels and tires at another.

"Many ways to skin the cat" but, it's all pretty much the same from the cat's perspective...

I truly appreciate everyone's input. It's interesting to hear about all the different scenarios, so to speak. Thanks folks & stay warm & dry.

Cash is king. Hypothetically speaking of course, if someone hands you 50K in 100's, you can report whatever you want. The DMV doesnt usually inspect a vehicle if it is already registered. If they question it, you can provide a photo of a car needing restoration. The bad part is you cant just go deposit 50K into your bank account, as they will report anything over 10K. In addition, you cannot "stage" lesser deposits under 10K cause they will report that too. And the way we are going, you can't use Cash everywhere anymore. So as Cash becomes less King by design, all this becomes a tax problem no matter how you look at it. That being said, I pay more than 1000 to register my cars every year because of their "value" as established by the sale prices reported at registration. Honesty or stupidity, I ask myself every year why I am such a rule follower...

It's because you have a conscience. Thanks for the perspective.

You could have purchased another asset and then harvest the depreciation offseting the capital gain?

You could go buy a painting….

I put the cash in my pocket and that’s that. Done. Do what you feel is right for you.

Careful dude. There might be an IRS agent on this website.

Or a rust-free 914 project car.