What Taxes Are Paid When Buying a Used Car in the State of New York?

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The Department of Motor Vehicles in New York charges a title registration fee and sales tax when you buy a used car in state. Regardless of whether you buy directly from a licensed dealer or from an individual, obtain acceptable proof of sales tax or secure tax exemption status. Otherwise, the DMV collects used car sales tax at the time of registration. The DMV calculates sales tax on the purchase price of the vehicle or on the fair market value, if you do not have a sales receipt.

Pay Sales Tax to Dealer

A New York licensed used car dealer can charge sales tax on the vehicle at the time of purchase. He can also charge a registration fee to title and register the vehicle, but the fee doesn’t count towards tax. If the dealer charges sales tax on the vehicle and does not register the car for you, you do not have to pay sales tax again when you register the vehicle with the DMV.

Sales Tax Exemption

According to New York law, you do not have to pay sales tax on a used vehicle if the car was a gift or purchased from a family member. If you paid out-of-state tax when you purchased a vehicle outside of New York, claim credit for the paid tax and reduce your New York sales tax. If you were not a resident of New York when you purchased the vehicle, complete form DTF-803 and receive a non-resident tax exemption.

Pay Sales Tax to DMV

If you purchased the vehicle from a car dealer who did not charge sales tax or you purchased the car from an individual, pay sales tax at the DMV when you register the car. Most DMV offices use nationally recognized reports to determine the fair market value of a vehicle.

Sales Tax Rate

The tax rate on used car purchases in New York is four percent. If you get a loan through a used car dealer or with a lender, roll the four percent tax into the loan. The dealer or lender is responsible for getting the tax to the state. Otherwise, pay the four percent tax when you register the vehicle with the DMV.

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About the Author

As curriculum developer and educator, Kristine Tucker has enjoyed the plethora of English assignments she's read (and graded!) over the years. Her experiences as vice-president of an energy consulting firm have given her the opportunity to explore business writing and HR. Tucker has a BA and holds Ohio teaching credentials.

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