From the Forum – Out-of-state Private Used Car Purchase

Photo by PoPville flickr user Casey Labrack

Out-of-state Private Used Car Purchase

“I’m purchasing a car from a friend who doesn’t live in DC (or Virginia or Maryland, for that matter). I generally understand the process of getting it registered in DC — get it insured, bring proof of insurance and the title and so forth to the DMV, prepare to pay excise taxes, etc.

My question is how to legally get the car to DC. I plan to pick it up from her, and in her state, she is technically supposed to hang onto the plates when she sells the car. My understanding is that DC won’t give me temp plates until I bring in the signed title. Should I get the title signed and bring it in to get temps to put on the car when I go to pick it up? Or should I just keep her plates on it and mail them back to her once I can get the car back to DC? I’m wondering if anyone in POPville has experience doing this sort of thing and can advise.

Separately, I’m also curious if anyone has kept their excise taxes low by bringing in a bill of sale that reflects the actual purchase price — since I’m getting this for a bit cheaper than what is likely provided in their database.”

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21 Comment

  • Regarding the excise tax, I’m afraid you’re out of luck. DC goes by the fair market value assessed on the vehicle, not the price you actually paid. Last year I bought a car from my brother at a steep discount but was still hit up for an excise tax based on a higher assessed value.

    • Yes, can confirm this. I bought a scooter from my buddy in NYC for $900, but paid excise tax on the “fair market value” as if I paid $1800. It definitely was not worth that much, as the thing is a total beater. No one in their right mind would pay $1800 for this thing.
      As for the license plates, I’d keep them on while driving to DC and mail them back to your friend. Easy.

      • brookland_rez

        I had this work to my advantage once. In January 2012 I bought a 2011 model motorcycle. It was brand new. When I went to the DMV I gave them the bill of sale which was for like $12,000 or so. Despite that, they looked up the NADA value and said it was worth $9000 (as if it were used). I wasn’t one to argue especially when it would have resulted in me paying more taxes.

    • Woah, that’s not how it’s supposed to be. I brought in a bill of sale for my sweet scoot for what I paid for it on Craigslist–$750–and that’s what I paid the tax on. I’m sure the assessed value would’ve been a lot more. If you purchased it in a legitimate arms-length sale, you should only be charged for what you paid. Remember to bring in both the title AND a bill of sale.

      • For the record, this was in DC. I went to the Brentwood DMV.

      • Did you buy it from a shop? How did you guarantee it was “arms length”? I paid cash to a friend, so there was no official bill of sale.
        I’m assuming the the OP might not qualify, since they are buying the car from a friend in a private sale.

        • I bought it from another individual on Craigslist. They didn’t question whether the sale was arms-length, though they might have asked if the price seemed like too much of a bargain. I would’ve argued with them and at least asked to speak with a higher-up if they tried to tax me on more (caveat: I am a tax professional and also kind of pushy, so).

          I paid cash to a stranger. You can pay cash to a friend or stranger and still write up a bill of sale (or download one from the internet). The person at the DMV took the price from the bill of sale. Without a bill of sale, you will almost certainly get stuck with the estimated value.

      • PDleftMtP

        Nope. The excise tax is based on fair market value as determined by the NADA guide (and there’s nothing particularly extraordinary about an excise tax based on FMV). They only use bill of sale if there’s no NADA value, which may have been what happened to you. You could have been pushy, but you would have lost the argument. 18 DCMR 401.16.

        I looked it up after I got a great deal from an out of state dealer.

        • I know what it says. The regulation still leaves open the possibility that the NADA guide doesn’t provide the FMV (that could be because it’s not listed, the miles are way higher, it is banged up, it needs lots of cash dropped on it to run, people snorted coke in it, the chain of title is iffy, or any other number of things that affect value a lot). The best evidence of FMV is still a sale between two unrelated parties. Still worth arguing if you think the value differs a lot from the book and have a bill of sale.

  • When you purchase the vehicle you should get temporary tags from the place that does your title transfer. If not, search for transit tags and there’s something that you can print off and display in your window for something like 2-3 days iirc

    • If you’re close friends they should just let you drive on the tags and mail them back. If not, you should get the in transit tags from the state dmv. Or, you can chance it. And drive without plates. I would recommend that option.

  • Most states have something called a travel permit or something that last like 72 hours. TBH, I once titled a vehicle in VA to keep the taxes low, and then took the title to DC to get one there. There is a difference of 3-4% between the two jurisdictions.

  • I don’t know if it is the correct way, but when I bought a car from out of state, I drove it on their tags and mailed them back when I got to DC and go the new tags. I plan to do this again in the fall because I am purchasing my parents’ car in Ohio.

    As for the excise tax, DC is a stickler and they don’t care about the purchase price – just the FMV and tax is based on that regardless of the purchase price.

  • Most states have title transfer businesses, but I would highly recommend just going to a AAA office together when you’re ready to finalize the deal, regardless of what state you’re in. They can process all the transaction paperwork and issue you temporary tags on the spot. AAA members get a discount, but you don’t have to be a member to use them.

    • I should add: This is safest way to do it. This way, you’ve fully completed purchasing the car, the temporary registration and insurance are all current and in your name, and your friend is relieved of any liability that might come with you driving with the old plates after the sale. In many states, those tags are void following the sale. No reason to screw around.

  • When I purchased a car, I brought the Title, Bill of Sale, and Proof of Insurance to the DMV, and they gave me the permanent plates and a temporary registration on the spot. The registration is good for 30 days, enough time for you to drive it to DC and get an emissions check before you get the permanent registration.

  • I was told that if you had a certified letter stating that it was a gift, DC would waive the excise tax. Look into that.

  • I just tried getting away with presenting a bill of sale and the clerk helping me tried to accept it to do me a favor but the manager stepped in and said they had changed their policy on it.

  • Not a great idea to drive on the highway for a distance on someone else’s plates. You can pay her and have her send you the title and bill of sale. Then go to the dmv and get the plates and temp registration, and go get the car. Sounds like they have gotten more strict about the cash value issue. They used to cut some slack if you didn’t try to say you got the car really cheap.

    By the way, there is no excise tax on new or used hybrid vehicles in DC. And since it is not a sales tax but an excise tax, I presume it is deductible if you itemize. Any tax gurus on here know if this is true?

  • I bought a used Jeep in PA; a new title and temp plates were issued there and I had 30 days to go for DC inspection and then to DMV for plates and registration. The tax was on the market value as I paid just half of that value when purchased.

    A word of advice: be prepared to wait FOREVER at the DMV as it seems that this process has the least amount of people working. Good luck.

  • Don’t drive with your friends plates once it is sold. If you do get tickets or get in an accident, your friend is responsible. States allow you to drive without plates for a certain number of hours as long as you have a copy of the Bill of Sale, title signed over to you, and proof of insurance on your car. If you get pulled over, they will not ticket you as long as you have those items with you. This is what you do:

    1. Determine the day you will buy the vehicle.
    2. Call you insurance company and tell them and get insurance on the vehicle starting the date of your purchase. You MUST insure the vehicle before you register it and drive it away from your friend’s
    3. Buy vehicle, get Bill of Sale from friend, give friend back plates – all same day.
    4. Go to DC DMV within the number of hours they require to register.

    Note, you won’t get more than a day or two to drive around without plates and register it.

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