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Car sales tax question/gift in New Jersey

post #1 of 8
Thread Starter 
Just wondering if anyone knows the tax laws or how it effects our tax return etc. We paid for the car in cash so taxes have been paid but we're transfering ownership to my parents as a gift so they don't have to pay sales tax. Is this something we have to put on any type of tax return? the car probably has a value of $15,000.
post #2 of 8
Sales Tax
A vehicle is only exempt from sales tax if the customer indicates on the purchase price that it is a gift on the sales tax form.

http://www.state.nj.us/mvc/Vehicle/T...ingVehicle.htm
post #3 of 8
I agree with Capper



it's perfectly fine to transfer a motor vehicle as a "gift"



just make sure you provide documentation as such



whenever I've purchased a used car from anybody, I ask as part of the settlement if they'll take the agreed upon price, and give me a separate hand written note for an agreed upon lesser amount which I present to MV



I have had instances where I received a letter from the state treasury dept asking for sales tax on the 'market value of the vehicle' ...



I then sent them a copy of the signed note from the seller for the lesser amount and told them something bogus like the engine needed to be rebuilt



that was the end of the story



'gifts' are legit
post #4 of 8
Thread Starter 
Thanks guys. The car is in my wife's name and she's going to go to motor vehicles with him to do the title transfer. I just didn't know if it's something we'll need to put on our tax return or if there's any form to fill out. I've bought and sold cars that were declared gifts but usually older cars that didn't have much value. I wasn't sure if there was a difference given this is an almost new car worth $15K.
post #5 of 8
Not sure but I think in NY state the maximum tax free gift is 10,000 maybe it's different in NJ
post #6 of 8
Quote:
Originally Posted by Seidner View Post
Not sure but I think in NY state the maximum tax free gift is 10,000 maybe it's different in NJ



I don't know about the state level ...



but I believe that mark of 10,000 is the federal IRS level annually



bu again,



nobody has to know the vehicle is worth 15,000 if all sides agree it somewhat "beat" and assign a value of 9,500
post #7 of 8
I gave away a car and the NJ tax man went after my parents for tax on the blue book value (>$20K). We had to fill out a form they sent us declaring it was a gift. That was all there was to it.
post #8 of 8
To avoid the step MikeY's parents went through, when transferring ownership at the NJMV, bring a signed note decalring the car a gift, that should prevent a future audit.
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