How to Determine a Car Title Tax in Virginia

by Tom Streissguth
<p>If you're retitling a new or used car in Virginia, there's a <strong>Motor Vehicle Sales and Use Tax</strong> in effect. The law sets the tax rate at 4.05 percent of the gross sale price or $75, whichever is greater. Virginia offers a few exemptions, and sets out some rules on private transactions, in which sellers are also liable for collecting and remitting Sales and Use Tax.</p>

Price Matters

<p>The Sales and Use Tax is based on gross sale price, which does not include trade-in credit or incentives provided by the dealer or the manufacturer. This payment comes on top of the state's registration fee, which as of 2015 had reached $40.75 for vehicles under 4,000 pounds. Virginia tacks $64 on to the sales tax amount for hybrid and electric vehicles. The sales tax is paid by the seller to the <strong>Division of Motor Vehicles</strong> at the time the vehicle is titled to the buyer. Ordinarily, car dealers add the sales tax amount to the sales contract at the time of purchase.</p>

Exceptions to the Rule

<p>Virginia <a href="http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+58.1-2403">exempts</a> certain vehicles from sales tax, including those used by federal or state agencies or volunteer fire departments. In addition, non-resident buyers who are moving out of state and titling their cars in Virginia for the purpose of recording a lien against the vehicle are exempt, as are lenders repossessing vehicles from defaulting borrowers. Buyers must bring written proof of their exemption qualification or complete a <a href="http://www.dmv.virginia.gov/webdoc/pdf/sut3.pdf">Purchaser's Statement of Tax Exemption.</a></p> <p>If you're moving to Virginia from another state and registering a car you already own, you don't need to pay sales tax. For vehicles purchased within the last 12 months, you must prove that sales tax was paid --otherwise you're liable for it in Virginia.</p>

Private Sales

<p>Virginia law on Sales and Use Tax also governs <strong>private transactions,</strong> in which a car dealer is not involved. The tax for these sales is based on the value assigned to the vehicle by the <a href="https://www.nada.com/">National Automobile Dealers Association</a> Official Used Car Guide. If the vehicle is at less than five years old, the seller must complete an Affidavit for Procurement of Title. For older vehicles, the state wants a bill of sale, signed by both parties, that lists the vehicle identification number, date of the sale, and a description of the vehicle.</p>

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About the Author

Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.

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