Memphis Business Daily

When you purchase a car from a private owner do you pay taxes on the the market value of the car?

Purchasing a vehicle from a private owner, do I pay taxes on the actual purchase price that I paid or the market value of the car, which of course is cheaper than the purchase price? Don't want to cheat uncle Sam.

Public Comments

1. The amount varies from state to state, check with your DMV. Also - ALWAYS transfer the cash and title at the DMV.
2. You pay it on the purchase price. The market price is a guess or an average based on a lot of external data. All similar cars will differ slightly, so tax is paid on a case-by-case basis. One question for you also - if the market price is cheaper as you stated....why are you buying the car for more? Good for you for not wanting to cheat Uncle Sam, that's pretty impressive that you're making sure you do it right. Kudos my friend.