Tax Transfer
Vehicle Sales Tax and Title Transfer Fees
Be sure, when budgeting for a new car, to account for the possibility of sales tax and title transfer fees. In the excitement of the purchase, it's easy to overlook these two after-the-fact charges.
Car Sales Tax
Excuse yourself from reading this section if you reside in Delaware, Montana, New Hampshire, or Oregon. None of these purchase-friendly states charge sales tax. For everyone else, including Washington D.C. residents, read on. (Note: Though Alaska does not impose a state sales tax, state laws allow for municipalities to charge a local sales tax.)
The purchaser must present the remaining copies of the Transfer/Tax Form (APV9T) and the Vehicle Registration (APV250 only, signed by the registered owner) to an Autoplan Broker for registration within 10 days of sale. New York State imposes a real estate transfer tax on conveyances of real property or interests therein when the consideration exceeds $500. The same applies for gifts given through a foreign wire transfer. If you send a gift that exceeds $15,000, you must file a gift tax return with the IRS and pay any related gift taxes. This is where gift tax law gets tricky, however. Every person may, over the course of his lifetime, gift up to $11.18 million free of gift tax. The rate of tax is $2.20 for each $500 or fractional part of $500 of the value of the property being transferred. The tax is imposed ½ on the grantor, ½ on the grantee. Controlling Interest.
The sales tax you'll pay on your new car is contingent on where you live. This includes not only your state, but also your county and city. Currently, out of the 45 states that charge a sales tax, 34 also allow for counties and municipalities to impose a local sales tax.
The exact sales tax rate varies by state and jurisdiction, but to give you an idea of what states are charging, Hawaii has the nation's lowest combined state and sales tax rate at 4.35%, while Tennessee charges the highest at 9.44%.
How to Calculate Your Auto Sales Tax Rate
If you're purchasing a new car from a dealership, the finance manager will calculate your sales tax rate for you. Your rate will be based on three scenarios:
- Total purchase price.
- Purchase price after trade-in is deducted.
- Purchase price after cash incentive is deducted.
If, however, you're buying a new car from an individual, you'll need to do the brain-work yourself. Fortunately, many states make this easy by providing online sales tax rate calculators. If you cannot locate an online sales tax rate calculator, check with your State Comptroller for your sales tax rate.
Keep in mind that the sales tax you pay on your new car is based on where you register it. For example, if you purchase a vehicle in New Hampshire, where there is no sales tax, but reside in Amherst, Massachusetts which charges sales tax, you will be taxed on the new car.
Title Transfer Fees
A car title serves as your proof of ownership. Whenever a used car transfers ownership, a title transfer fee comes into play. This applies to the following car-transfer scenarios:
- Sale
- Inheritance
- Gift
- Transferring to family
- Paying off a car loan
Title transfer fees vary by state. In most cases you pay this fee before registering the car. Some states, such as Oregon, that allow you to title and register at the same time. If in doubt, contact your local DMV.
The Department of Finance has closed its Payment Centers due to the COVID-19 Outbreak. You may purchase the City's Real Property Transfer Tax stamps at:
Tax Transfer Llc Membership Interest
- 121 North LaSalle, Room 107 Monday through Friday 8:00am – 5:00pm.
| Municipal Code Reference: | 3-33 |
| CAPS Code Reference: | 1002820051801 |
| Tax Return Form Code: | Form 7551 |
| Procedure: | A tax is imposed upon the privilege of transferring title to, or beneficial interest in, real property located in the city, whether or not the agreement or contract providing for the transfer is entered into the city. The tax shall be at the rate of $3.75 per $500.00 of the transfer price, or fraction thereof, of the real property or the beneficial interest in real property. In addition, a supplemental tax at the rate of $1.50 per $500.00 of the transfer price, or fraction thereof, shall be imposed on transfers taking place on or after April 1, 2008, for the purpose of providing financial assistance to the Chicago Transit Authority (“CTA”). This supplemental tax shall be referred to as the “CTA portion” of the Chicago Real Property Transfer Tax, and the $3.75 tax shall be referred to as the “City portion.” |
| Tax Rate: | $5.25 per $500.00 of the transfer price, or fraction thereof, of the real property or the beneficial interest in real property. In general, The Buyer is responsible for $3.75 and the Seller is responsible for $1.50. |
| Exemptions, Deductions and Credits: | The exemptions allowed are:
No transfer is exempt unless declaration describes the facts supporting the exemption along with supporting documentation. See Section 3-33-060 for exact terms, which control. Section 3-33-060 (O) includes a refund for the CTA portion of tax for transfers to transferees who are age 65 years or older, who occupy purchased property as their personal dwelling for at least one year following the transfer, if the transfer price is $250,000 or less. This exemption is administered through a refund administered by the Tax Division of the Department of Finance located at 333 South State Street, DePaul Center, Room 300. |
| Rulings and Procedures: | Real Property Transfer Tax Ruling 1 - Real estate cooperatives. |