Do you pay sales tax on a used car?
In the purchase of a car many factors intervene to make a decision. In addition to vehicle characteristics such as size, make, and model, general condition and mileage, among other things, also play a role. However, the most determining factor is usually the price of the vehicle, since a good offer can seduce any buyer. But in addition to the sale price, you have to consider some others such as financing and additional costs. And one of them may be the tax burden that must be faced when buying a used car. That’s where a very common question among consumers comes up: Do you pay sales tax on a used car? And if so, how much are the amounts? You will be able to answer all this and much more by reading this post.
Do you pay sales tax on a used car? – Amounts and Characteristics
As usually happens with most taxes, the amounts are variable according to the state in which we are. Therefore, in order to establish the characteristics of the used car sales tax, we must clarify that it is valid for the state of Florida, but the amounts and characteristics may vary considerably in other parts of the country.
The state of Florida establishes, since 2012, a flat rate of 6% for sales tax on a car, both for new cars and used cars. This rate is applied to the total amount of the price of the vehicle actually paid, taking into account some exceptions. In general, this is the actual value of the car, but does not take into account manufacturer rebates, although some discounts that the dealer may apply at the time of closing the sale are taken into account. That is, if the seller offers any type of discount or concession, this is taken into account by the state of Florida to calculate the amount of the tax, but not the refunds.
The current law in the state of Florida establishes that the dealer is in charge of withholding the amount of the tax at the time of the sale. This means that, when buying the car at the dealership, you must pay the amount of the tax that will then be transferred to the collecting entity. Now, if you buy a used car directly from its previous owner, do you pay sales tax on a used car? The answer is yes, the value is paid by the buyer of the vehicle, who must remit the correct amount to the county collection agency. For this reason, the Florida Department of Highway Safety and Motor Vehicles advises closing the transaction directly at a location of the county tax collector. In this way, you will be able to receive all the necessary advice to pay the correct amount for the tax.
To this amount established by the state of Florida, an extra surcharge must be added. Generally, each county establishes a differential amount or rate that it collects upon the sale of each vehicle. These surcharges only apply to the first $5,000 of the total amount of the purchase, so in many cases you should not take the total value of the car as the tax base. It should be clarified that the tax you must pay is the one that corresponds to the county where you live, not the county where you buy the car. As an example, Miami-Dade County charges a 1% surcharge, while Broward County charges no additional auto sales tax rate.
How to calculate the tax on the purchase of a used car?
With this information it is possible to calculate the amount of tax that must be paid when buying a used car. However, to clarify the question of whether you pay sales tax on a used car, it is useful to review an example to calculate the amount.
Let’s start with an example like the following: You are interested in buying a used sports car at our Airport dealership that has a nominal price of $40,000. At the time of purchase, you find an offer that discounts $5,000 for payment in cash, offered by one of our sellers. So, since it is an effective discount, the value that we must take as the taxable amount is $35,000. Therefore, applying the 6% tax rate, we get $35,000 x 0.06 = $2,100. That is, you will have to pay $2,100 in tax for the sale of a car. Now, if you are also a resident of Miami-Dade County, we must add the additional 1%, but only on the first $5,000. That is, the county surcharge implies an extra $500 payment.
If I buy a car outside of Florida, do I pay sales tax on a used car?
In many cases, the question arises as to what happens if a used car is purchased outside of Florida and transferred to the new owner within the state. The simple answer is that the 6% fee must still be paid at the time of registering the car with a Florida license. But on the other hand, there is good news. If you already paid any type of tax at the place of purchase of the car, it can be deducted from the tax to be paid in Florida. In the event that the payment is greater than the value of 6% corresponding to the state, you will no longer have to pay anything else. On the other hand, if the amount is lower, you will have to pay but only the difference until completing the value of 6% of the total purchase.
As you can see, there are many issues to consider. The question do you pay sales tax on a used car? it usually has a positive response, although with different characteristics depending on the state and the county to which it belongs. At Airport we can solve all the doubts that arise when buying your used car. We offer the best models at the most convenient price on the market and with the best Buy Here Pay Here financing. Do not hesitate to visit us to take the car of your dreams.