What state to buy a new car in?

[bogey]

I'm thinking about buying a new car and obviously want to get it as cheap as I can. Is there any reason why people don't always buy their cars in Delaware to avoid sales tax?? (assuming they live close enough)

Also are cars different prices in different areas. ie. Is the same car in California going to cost me more than the car in Pennsylvania?

[ElaineMonster]

If you really want a cheap car, you should use eBay. I'm serious.

Also, used cars are always cheaper in bigger cities, and the selection is larger, so that might be why people travel.

(And conversely, if you have a used car to sell, you will get a higher price if you take it to a smaller, more remote city than if you sell it in a larger city, assuming transportation costs don't eat up the profit.)

[Sniper]

Technically, you are responsible for paying Sales/Use taxes in your state regardless of where you buy things!

[cdxx]

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Technically, you are responsible for paying Sales/Use taxes in your state regardless of where you buy things!

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there are some (perfectly legal) ways around that. where are you living? transfer the car as a gift to a friend in delaware, and then have him sell it to you for $1000.

[jively]

[ QUOTE ]
there are some (perfectly legal) ways around that. where are you living? transfer the car as a gift to a friend in delaware, and then have him sell it to you for $1000.

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You have to be careful saying what's perfectly legal.

If you give a non-spouse more than $11,000 in one year, you have to file a gift-tax return. There's no tax due, but you still have to report it.

If you make a gift without strings, your friend might just keep it and not sell it to you for $1,000.

Next, if you buy the car for $1,000 when the FMV is much higher, that is deemed part sale, part gift. If the gift part is more than $11,000, the other person will have to file a gift tax return.

Finally, if you are doing this just to save money on sales or use tax, the state could see right through the transaction and charge the tax. If you are giving the car with the string that your friend will sell it to you for $1,000, the state will see right through it. (I know the IRS does things like that. Any time you do something just to save on taxes, and for no other financial reason, it's a red flag.)

-Tom

[cdxx]

you bring up good points. i can only theorize that (1) IRS has no jurisdiction over state taxes, especially DMV taxes, and (2) technically, in most states the sales tax on bringing a car over the border is an INCISE FEE (at least it is in MD), and not a tax (although it is waived if you already paid sales tax on it). not sure if IRS cares if you are avoiding fees as opposed to taxes.

[poker1O1]

Arizona is usually mentioned as a good place to buy cars because cars rarely rust in AZ due to the lack of humidity and moisture in the air

[Nomad84]

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Also are cars different prices in different areas. ie. Is the same car in California going to cost me more than the car in Pennsylvania?

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There will be some differences, but I don't really know what they all are. An example would be "California Emissions" where a car might have additional or different equimpent in order to meet the CA emissions laws. I know that a lot of trucks sold here come with an "Oklahoma package" or an "OK/TX package" or something like that, but I don't know what is included in that. I'm guessing that any differences such as these should be obvious when you read the options list on the window.

[Carl_William]

I read a few of these posts & I will mention what an old classmate of mine did to save paying taxes. When she & her husband finally retired they bought a trailer and truck (she called it a 3rd wheel setup). She lived in CA at the time, but bought the 3rd wheel setup in Oregon where she saved on sales tax. She was/is a CPA accountant. After she bought the 3rd wheel; she & her husband toured the USA for aabout six months. She then moved to New York, and now has homes in CA and Georgia.