Georgia Changing tax on cars

First and foremost, this is NOT meant to be a political thread, I'm posting it because I know a lot of us live in GA and deal with old cars. If you want to start political rants about taxation, take that E36 M3 elsewhere.

Okay, now to point. Starting this year, Georgia is discontinuing the yearly advalorem tax on cars that you normally pay when you pay "tags" every year. When a car is sold privately (NOT at a dealer) the state will charge you a one time fee when you register it in your name.

This means if you buy a car off craigslist, you will have to have 6% of the sale price ( right now, more in coming years) to pay the tax at the same time you register the vehicle. No waivers, no payment plans. If you are buying challenge priced cars, it's not that bad, but if you buy a $28k pickup truck, watch out.

Cars sold at dealerships will now NOT pay sales tax, but will pay advalorem instead. Also, if you bought a car from a dealer in 2012, you can choose to go to the new system and they'll credit any sales tax toward the advalorem fees, which should be close to a wash.

the up side is that for any car newly registered, the recurring yearly tag payment will go down immensely, and if you plan on owning the car for several years, you may still come out ahead. if you swap cars every 2-3 years, you're going to pay more.

Cars already registered will continue the yearly payments like they always have. As someone who owns 2 paid-for cars and one that will be this year, this hurts my feelings.

Atlanta Journal Article about it

In Ohio, we've always (well, for as long as I've been owning cars) paid sales tax on transfer. There have been no annual taxes, well, no value-based taxes, just the registration fee. I thought that was how all states operated and was surprised to hear about other systems. (Granted, that was many years ago.)

dculberson wrote: In Ohio, we've always (well, for as long as I've been owning cars) paid sales tax on transfer. There have been no annual taxes, well, no value-based taxes, just the registration fee. I thought that was how all states operated and was surprised to hear about other systems. (Granted, that was many years ago.)

that's how it is in TX as well, 6.25% tax when you transfer a car into your name, the annual registration fee i think is based on the weight of the vehicle, for my xterra runs around $85 a year. i've heard of other states doing the annual "property tax" on vehicles which to me seems like it should be separate from the registration fee.

Same way in PA (taxed at purchase). However, if you buy a car at a stealership, you still pay the one time tax. It is usually rolled in with the financing.

Yeah, I don't think it's a bad system necessarily, but it hasn't been well publicized. I didn't want anyone here to get surprised by it.

I think there are people who will get caught in the middle. Imagine how pissed you’d be if you bought a $50k diesel truck at the end of 2011 from a dealer – you paid the sales tax, and now you get to pay $300/year for tags on a vehicle that maintains high value for a lot of years. You’d be getting boned.

I hear it was pushed hard by the car dealers' lobby as a way to drive business to the dealerships, as they'll undoubtedly find a way to roll the fees into the financing. People won't have to come up with it out-of-pocket, and the financiers will make a little more money.

I'm probably about to get surprised by it... I just paid off my S2000, which was registered in Illinois (cheap) and was waiting until my birthday in May to register it in Georgia. Will I need to register it NOW to avoid the second tax on the car since the title was just transferred to my name?

It's a good thing I never spend more than $500 on a used car!

sobe_death wrote: I'm probably about to get surprised by it... I just paid off my S2000, which was registered in Illinois (cheap) and was waiting until my birthday in May to register it in Georgia. Will I need to register it NOW to avoid the second tax on the car since the title was just transferred to my name?

By the sounds of it, and if it makes any sense at all, if the title is in your name it won't matter.

wvumtnbkr wrote: Same way in PA (taxed at purchase). However, if you buy a car at a stealership, you still pay the one time tax. It is usually rolled in with the financing.

Yes and no. We pay the sales tax at purchase - which depending on where you go can vary a LOT with private party transactions (I've been going to one tag place for years where they don't give a rats ass how much sales tax the collect and thus don't care how much you say you paid for a car) since the title-transfer stores are private here.

However, in PA we also pay a yearly registration fee based largely on weight. Cars are $36/year. My Cummins - $153/yr. My old 1/2 ton pick-ups were $50-ish. That's one advantage of getting Classic tags for an older car: one time $75 fee at registration and you're done for as long as you own the car.

Across the river in NJ it's totally different...

ultraclyde wrote: I hear it was pushed hard by the car dealers' lobby as a way to drive business to the dealerships, as they'll undoubtedly find a way to roll the fees into the financing. People won't have to come up with it out-of-pocket, and the financiers will make a little more money.

That's basically how it works in PA. Sales tax on new car purchases gets rolled into the financing.

One interesting question may be with regards to how the fees are accounted. Is the annual fee you pay in GA considered a tax by the IRS? If so it would be deductible on your Federal return. Sales tax would not.

As long as I have been driving and buying cars CA has made you pay sales tax on the purchase price of a vehicle when transferring title. The registration "fee" is directly correlated to vehicle value. If you are not financing, the vehicle is "worth" whatever you claim on the bill of sale. Most buyers/sellers agree to list purchase price lower or the minimum of $500. At least registration "fees" go down as the vehicle value goes down. Not sure why price determines registration costs, seems that age and vehicle weight make more sense. But it's CA, whadya expect?

Please don't let this catch on in my home state: no one could afford a car.

To Ian, the Georgia Ad Valorum tax is deductible on your income taxes. Doesn't amount to much off taxes, but every bit helps I guess.

In SC you pay a sales tax on any purchase that is capped at $300. That may change in the future. You also pay a county property tax on all vehicles and you have an annual tag fee. If you live in the city, you pay a city tax on the vehicle too. The tag isn't too expensive. The property tax can be a bitch if you have a newer car. Spartanburg County also has a loverly $25 annual "road fee" added to each vehicle.

So is the tax amount based on the bill of sale or the value that the state assesses? I know on paper Georgia values my '69 Olds at $100, when the true value is closer to $15,000.

Yes, things are changing. But having moved to GA from out of state, I'm relieved to only have to pay tax on the car once, not every year.

poopshovel wrote: It's a good thing I never spend more than $500 on a used car!

yup. some states just seem way to freakin confusing...

here in MN, they don't even really care how much you pay for a car or light truck that's more than about 10 years old... they will still charge the same $40 or so to transfer the title, $10 or so for plates (if needed) and $40 or for tabs (if needed).. then you just have to pay for new tabs every year and new plates like every 7 years or so.. the really sweet deal is if the car is 20 years old and you get collector plates- $40 or so one time fee and that vehicle is registered FOR LIFE, you only have to have a plate on the rear of the vehicle, and there are really no restrictions on where, when, or how often you can drive it other than needing to have another vehicle registered in your name with normal plates on it for daily driver duty...

newer vehicles are registered on a sort of rolling depreciation curve that gets cheaper every year, up until the 10 year thing when they go to the cheap flat rate.

when i bought my brother's '04 Cavalier about a year and a half ago, it cost me right around $120 to transfer it into my name but the 98 Cavalier i got this summer cost me $60 or so for title transfer and new plates to replace the non-transferrable American Legion plates that the previous owner had on it- and the nice lady didn't charge me for tabs since the ones on the car were good until April.

ultraclyde wrote: Cars already registered will continue the yearly payments like they always have. As someone who owns 2 paid-for cars and one that will be this year, this hurts my feelings. Atlanta Journal Article about it

This part is key to those who are keeping cars already in the system; we still have to pay the ad valorem tax until vehicles are sold or owners move out-of-state.

The saving grace (for me, anyway) is my ad valorem on one car is less than the annual tag fee, nearly the same situation on the other and the truck fee will continue to drop, too. Sometimes there's a silver lining to owning three vehicles with a combined age of 67.

That ad valorem tax sounds a lot like the annual property tax up here. It can be outrageous on new cars or if you drive an old clunker (like me! ) it's pretty cheap.

Here in FL we pay sales tax on private party transfers as well. After that, it's just yearly registration/tag fees. I hated the GA system when I lived there. Paying a ton in tax every year for renewal sucked.

in georgia, we tax assets. your car is an asset....

GA used to infuriate me when I had a newer car, now that they're all 20yrs old I've mellowed about it.

Here in MI there's 6% sales tax, and a yearly fee to register the plates. That fee is based on the ORIGINAL MSRP. My 1992 Benz cost me almost $300 a year to register. Seriously I pay 10% of the purchase price....EVERY YEAR.
So, what the heck is advalorem?

In reply to DrBoost:

Roughly the same thing as MI, just applied differently with different words.

I wonder if I could sell the two in my name to my wife for $500 ea, then buy the one in her name for $500? One time payment of $90 plus xfer fees. Vs a current yearly fee around $225.

They'll have to have some tie to fair value though....

yamaha wrote:

sobe_death wrote: I'm probably about to get surprised by it... I just paid off my S2000, which was registered in Illinois (cheap) and was waiting until my birthday in May to register it in Georgia. Will I need to register it NOW to avoid the second tax on the car since the title was just transferred to my name?

By the sounds of it, and if it makes any sense at all, if the title is in your name it won't matter.

Well, I haven't actually transferred the title to the state of GA yet, but from what it looks like, I have been the owner of the vehicle since I bought it 4 years ago and the title I was sent was basically as a "Release of Lien".

It's my first nice car, and I would hate to have to pay tax in GA on top of the 10% I paid in Illinois as well!