Taxes on a used car private sale

[tase25]

Hey, does anyone know exactly how the taxes work out on a purchase of a used car if sold privately???

Is it the Kelly Blue Book price + HST?

[Donshaw]

Every time that I have had to pay taxes on a privatley sold vehicle they have taxed the amount on the bill of sale.Unless the vehicle is over 20 years old then it has to be appraised.

[krimsalt]

^ is right. Thats why when i buy private sale cars, i always tell them to write a low number on the BoS. (for a mazda3, have them put like 2000$) that way the ministry charges little tax. its cash anyway, so they have no way of knowing

[tase25]

I heard it's whatever the Cdn Red Book's minimum value is. And then you pay HST on that. I could be wrong though

[MajesticBlueNTO]

if you're in Ontario, it is the higher of 1) the selling price of the vehicle OR 2) the wholesale value of the vehicle as stated on the UVIP (Used Vehicle Information Package) on the day of the transfer.

i.e. if the seller puts a price of $1000 as the selling price and the UVIP states the wholesale value is $2000, you pay taxes on $2000

[tase25]

if you're in Ontario, it is the higher of 1) the selling price of the vehicle OR 2) the wholesale value of the vehicle as stated on the UVIP (Used Vehicle Information Package) on the day of the transfer.

i.e. if the seller puts a price of $1000 as the selling price and the UVIP states the wholesale value is $2000, you pay taxes on $2000

Ah, thanks.

And is it HST taxes on that? My assumption is yes, since it's "harmonized".:bang

[azdame]

you can override UVIP's wholesale value by getting an appraisal at any dealership.
I have personally appraised vehicles for what they are actually worth.
The Story:
Brother-in-law didn't want to buy at my dealership.
He purchased a 2002 Acura RSX privately (320,000km rust bucket)
He went to register, he said it was a "gift" and claimed $1.
MTO said, "No. You're vehicle is worth $4200 on the UVIP sir."
He went to me, I appraised for much less than $2100 due to mileage, rust, clutch and overral condition of the RSX.
He saved hundreds in taxes. And I made a few $ as well.

Anyways.

[peterm15]

The only problem with that is if you total your car. That's all you get.

[Lockdown]

The only problem with that is if you total your car. That's all you get.
That is not true. Your insurance company will appraise the car separately.

[krimsalt]

The only problem with that is if you total your car. That's all you get.


That is not true. Your insurance company will appraise the car separately.

you can say "yea, when i got it, it was this crappy amuont, but i fixed it up, now its worht higher", so it is still a way to get by the system

[Lockdown]

you can say "yea, when i got it, it was this crappy amuont, but i fixed it up, now its worht higher", so it is still a way to get by the system

Insurance doesn't care what you paid for the car. In fact they have never asked me with used cars, only with brand new cars when I had full replacement coverage. That was for 3 years so even if the car was a total loss, I would get full purchase price up to 3 years.
I was just in an accident a few weeks ago and the car I was in I paid very little for as it was in barely running condition and needed a bit to certify. Insurance cut a cheque for 5 times what I paid for it. Never was I asked what I paid, only if I wasn't happy with the value, I could show them the same car with similar mileage and trim package to show the value was higher.

[krimsalt]

The only problem with that is if you total your car. That's all you get.


That is not true. Your insurance company will appraise the car separately.


Insurance doesn't care what you paid for the car. In fact they have never asked me with used cars, only with brand new cars when I had full replacement coverage. That was for 3 years so even if the car was a total loss, I would get full purchase price up to 3 years.
I was just in an accident a few weeks ago and the car I was in I paid very little for as it was in barely running condition and needed a bit to certify. Insurance cut a cheque for 5 times what I paid for it. Never was I asked what I paid, only if I wasn't happy with the value, I could show them the same car with similar mileage and trim package to show the value was higher.

:thumbsup just gives more a reason to low ball the number on the BoS

[peterm15]

I had to provide my appraisal to my insurance company. That's what they told me.
I was only talking about the appraisal not BoS.

[tase25]

It's true, the insurance company doesn't care what you pay for the car when they cover you. It's all about what the appraiser believes the car was worth at time of accident.

They can't penalize you for having a car handed down, or getting a good deal on one.

[Lockdown]

I had to provide my appraisal to my insurance company. That's what they told me.
I was only talking about the appraisal not BoS.

This is the case if your car is worth more than normal. Like a classic or has really low miles and is in incredible condition for its age. Whether you pay $1 or you get ripped off and pay double what the car is worth, your insurance will pay out to you the same amount. It's the cost to get you into the same car again, in the same condition and mileage as well as transmission and trim level.

[peterm15]

Could be. Mine was a classic. 86 olds with 72000km.

[dentinger]

if you're in Ontario, it is the higher of 1) the selling price of the vehicle OR 2) the wholesale value of the vehicle as stated on the UVIP (Used Vehicle Information Package) on the day of the transfer.

i.e. if the seller puts a price of $1000 as the selling price and the UVIP states the wholesale value is $2000, you pay taxes on $2000

THIS

i paid $15k for my GTI, but only paid taxes on $7400 of it.
but, as stated, they go by the UVIP.

[vinnierap]

Every used car i have bought or transferred ownership (4) cars the ministry always went by the contract price. Sometimes they didnt even ask to see the contract just asked how much i paid. If you have a document stating you paid $ X they cant make you pay taxes on $ Y. If they ever question it you can tell them that is the price you paid according to a legally binding cotnract that the buyer and seller both signed.

EXAMPLE. You buy a car without a motor for $500 and the uvip says the car is worth $2000. How the hell can they make you pay that?

[tase25]

So when you buy a used car privately, when exactly do you pay the taxes? Right when you are transferring ownership at the Ministry, or do you get billed for it later?

[aris]

So when you buy a used car privately, when exactly do you pay the taxes? Right when you are transferring ownership at the Ministry, or do you get billed for it later?

When you register the car in your name

[MajesticBlueNTO]

Every used car i have bought or transferred ownership (4) cars the ministry always went by the contract price. Sometimes they didnt even ask to see the contract just asked how much i paid. If you have a document stating you paid $ X they cant make you pay taxes on $ Y. If they ever question it you can tell them that is the price you paid according to a legally binding cotnract that the buyer and seller both signed.

EXAMPLE. You buy a car without a motor for $500 and the uvip says the car is worth $2000. How the hell can they make you pay that?

what the Ministry of Transportation Ontario says about paying tax on a private used car purchase (http://www.mto.gov.on.ca/english/dandv/vehicle/used.shtml#retail)

[Tokic_o]

When selling, the red book value will be stated on the UVIP (the used vehicle package) and you pay the HST on that amount when you go to tranfer ownership and present the UVIP

You pay the taxes on the spot when you go transfer the ownership.

[Lockdown]

Every used car i have bought or transferred ownership (4) cars the ministry always went by the contract price. Sometimes they didnt even ask to see the contract just asked how much i paid. If you have a document stating you paid $ X they cant make you pay taxes on $ Y. If they ever question it you can tell them that is the price you paid according to a legally binding cotnract that the buyer and seller both signed.

EXAMPLE. You buy a car without a motor for $500 and the uvip says the car is worth $2000. How the hell can they make you pay that?

You then have to have the car appraised if it is lower than the value on UVIP and apply for a refund.

Direct quote from the ministry

If you paid less than the Canadian Red Book value, you can get the vehicle appraised before changing ownership. If the appraisal supports a lower price than the Canadian Red Book, the buyer pays tax based on the higher value.
An appraisal or insurance document showing the vehicle's value must accompany the bill of sale.
If the vehicle transfer and tax payment based on the average wholesale value have been processed at the Driver and Vehicle Licence Issuing Office, an appraisal and an application for a tax refund must be sent to the Ministry of Revenue. Appraisal forms are available from Driver and Vehicle Licence Issuing Offices and Ministry of Revenue offices.

If you have never paid taxes based on the UVIP price and the cars were purchased privately, you likely paid more than Canadian red Book value, the transactions took place several years ago or someone was asleep at the switch (highly unlikely).
In the past 8 years, I have purchased and sold 6 different vehicles for personal use and assisted 4 friends in their purchases as well. i can only speak from my experience but the way it is stated on the above link, is the way it has always worked out for me.
If there is a work around to save some tax, other than gifting a car, which requires legal documents and lawyers fees, please let me know because no one likes to pay taxes.

[tase25]

Dumb question, but can a mechanic appraise a car? My guess, no.

[midnightfxgt]

Not unless he is a certified appraiser :)

Appraisal doesnt cost much. If it will save you a lot more than it costs, well worth it.

[Lockdown]

I passed a used car dealer the other day that offered appraisals for $50. They had a sign outside and I believe it said "from $50.00". If you want I can try and figure out where it was. It's somewhere between Markham and Scraborugh, around Markham Rd.
If you can save more than $100 it's probably worth your time.

[vinnierap]

Fair enough... I never really had any trouble at the ministry when registering my car. From my experience and my experience only I have only ever told them and showed the contract. I guess it depends on who is working or how far off the price on the contract is fromthe "red book".

[mazda_gurl]

if you're in Ontario, it is the higher of 1) the selling price of the vehicle OR 2) the wholesale value of the vehicle as stated on the UVIP (Used Vehicle Information Package) on the day of the transfer.

i.e. if the seller puts a price of $1000 as the selling price and the UVIP states the wholesale value is $2000, you pay taxes on $2000

Any time I have bought privately for less than the book value, I have had the seller put a lower amount on the bill and have paid tax on what I paid - not what the book says. Its really the discretion of whomever is behind the counter - sometimes they care, often they dont.

If you make it too obvious that you are trying to avoid taxes,you will pay HST on the book value. So if you are going to submit a receipt for "less than paid", try not to be overly low about it and you should be fine :)

[tase25]

So what you're saying is, kiss a lot of ass at the ministry. lol

[gq_movement]

In the same boat atm.
Looking to buy a 05 mazda 3 hatchback, and we're settled @ 7500.
But now with the tax issue, and from what i've read above, i can ask him to lower the price on uvip so when we go to the ministry (pray it's less book value) i can pay less taxes?

[thanu31]

Do you guys know what happens if the UVIP says wholesale price is "unavailable"

[gq_movement]

it's your lucky day? lol

[aris]

Do you guys know what happens if the UVIP says wholesale price is "unavailable"
That means you can tell them you bought the car for $500 and you will get taxed on that

[Wes08M3]

Do you guys know what happens if the UVIP says wholesale price is "unavailable"


That means you can tell them you bought the car for $500 and you will get taxed on that

Yup, they essentially take your word for it and they charge you tax based on what you say you paid.

Happened with my girlfriends car. Too bad she was honest when she told them what she paid :P