I am thinking of purchasing a car through private owner and its about 10,000. At DMV registration to take title ownership, I will get taxed around $800 (CA = 8%). Is there any way to avoid or reduce this amount? How low can I report the actual payment amount to the DMV without looking suspicious? Do any of you guys have a "workaround" for this? Can I record this transaction as "gift"?

Sure, form a corporation or trust, put the car in the entity, and buy the entity.

corporate taxes are a minimum of $800/yr in CA.

http://en.wikipedia.org/wiki/Tax_Evasion

Move to a state with lower taxes!

Or if you move to a state with no income tax, you could deduct the sales tax off your federal taxes!

Or quit complaining, realize you live in california, and pay up!

When you buy from a private party, you should always get a bill of sale showing the selling price. Ask the seller to write a lower price on the bill of sale. It doesn't really affect them, but could save you $$$ on the taxes. Just make sure it is believable. No one is going to believe you got a $10,000 car for $5,000.

Anyone who gives me red is an idiot if you wouldn't do this, too.

mrPete said:When you buy from a private party, you should always get a bill of sale showing the selling price. Ask the seller to write a lower price on the bill of sale. It doesn't really affect them, but could save you $$$ on the taxes.

Don't know about CA, but MA takes 5% tax based on a book value of the vehicle and not what the buyer paid for it. Otherwise, everyone would be getting cars for $1

sunrisetk said:I am thinking of purchasing a car through private owner and its about 10,000. At DMV registration to take title ownership, I will get taxed around $800 (CA = 8%). Is there any way to avoid or reduce this amount? How low can I report the actual payment amount to the DMV without looking suspicious? Do any of you guys have a "workaround" for this? Can I record this transaction as "gift"?

FW doesn't advise how to commit fraud.

mrPete said:When you buy from a private party, you should always get a bill of sale showing the selling price. Ask the seller to write a lower price on the bill of sale. It doesn't really affect them, but could save you $$$ on the taxes. Just make sure it is believable. No one is going to believe you got a $10,000 car for $5,000.

Anyone who gives me red is an idiot if you wouldn't do this, too.

Beware that if you do this; and you are sold a lemon; or were misrepresented you can only sue to the extent shown here. You will not be able to prove that you paid more than this amount.

ok, GIVE ME RED!! but I agree with lowering the purchase price on the bill of sale. Tax on used car is double taxation and is completely unfair. Some argue that taxation is illegal by constitution, let alone double taxation.

IMO, this is best done when buying from a relative. I purchased a car from my aunt years back and marked it as "GIFT" on the DMV form...