‘Ask Evan’: “Am I able to gift a car to my child and not pay sales tax?”

This week's 'Ask Evan' question comes from Jackie D in York County.  Jackie asks, "If I want to give my car to my child, why does she have to pay sales tax again on a car that sales tax was already paid?"

There was a day when you could sell a vehicle to a friend or a relative for a dollar, and only pay six cents to the state in sales tax.  Plenty of people were doing exactly that.  In fact, even strangers would agree on a purchase price, and would then report a much lower price to PennDOT in order to drastically reduce the amount of sales tax.  Those days are long gone as the state realized it was losing a lot of sales tax money.

Today, when one person sells a vehicle to another, no matter how much a buyer is paying for the vehicle, the state will take a look at the blue book value of the vehicle being sold.  Sales tax would be collected from that value-- even if the actual sale price is less.

There are exceptions to this rule.  As per your question, yes you can give a vehicle to a relative through a gift exemption.   However, there are a few rules that apply.  The buyer and seller have to fill out an affidavit of gift form from PennDOT.  You will have to prove that sales tax was paid to the state when the car was originally purchased. If the car being gifted has an out-of-state title, proof will have to be provided that sales tax was paid in a reciprocal state.

If you have a question you'd like to ask, send me an email to AskEvan@FOX43.com.  Put 'Ask Evan in the subject line.  You can also ready out to me on my Facebook page at Evan Forrester FOX43.  Whatever the topic, I'll do my best to find the answers you are looking for.