Tips on Buying Cars: CA Auto Tax When Out of State

Question
Hi Roger!
I live in South Carolina and have been looking for a specific feature on a Volvo XC60 that is apparently very rare. I found what I wanted (built-in child booster seats) through the CarMax network, and the car I want to buy is in Northern California. They offered to ship the car here for $1000, but I thought it might be fun (and save the expense) to go get the car myself - I have enough loyalty points with airlines and hotels that my travel to CA and back will be free except for gas. CarMax said that if I get the car myself I will have to pay 7.25% CA sales tax, even though I am bringing it back to SC where I live. (Here in SC, automobile sales tax is capped at a flat $300, making it far more affordable than almost anywhere else). If I use their shipping service then CA tax does not apply.

So is that the only option? One thing I thought may be a loophole would be a CarMax transfer to their Reno, NV store (offered for free), then pick it up there. Would that avoid the tax?

Thanks for any help.

Tom

Answer

sales tax  

calif   Hi Tom,

Sorry this is so late I have been on the road travelling with my family... Of all of the states to not buy a car in California tops the list...hands down! They have taxes on taxes down there and their still technically bankrupt. Did you know that in every state I know of (except California) when you trade in your old car you get no tax credit at all for it? Say for instance that you are buying a $20,000.00 car and your trade in is worth $10,000.00 In every other state I know of you would only pay tax on the balance of $10,000.00 (because the theory is that you already paid the tax on the value of your trade right?) In California they base the sales tax on the whole enchilada ....$20,000.00!!

OK so how do you avoid paying the tax... California requires a reseller certificate in order to dodge the tax and so you will not be able to buy the car in California and dodge their taxes ...so what's the answer? The good news is that CarMax is everywhere and their price to move that car from coast to coast is actually a really good one with most of those trips costing 1200 -1500 these days so they aren't trying to burn you.

I live next door to California in the great state of Oregon (Go Ducks!)and guess what? Oregon doesn't have a sales tax at all. The cost of moving that car from their California location to their Portland OR location will not be more than $400.00. In fact they shouldn't even charge you for the transfer from store to store ... but that doesn't mean they wont. Like everything else that expense is negotiable.

ask as many follow ups as you want I am with you on this one ...Good Luck