Paying Sales Tax On Private Sale

[Ferdundra]

Hi,

I am looking at purchasing a private sale used vehicle and have been reading up on the UVIP package on the MTO website. To my surprise it states that retail sales tax must be paid on any vehicle that is not a gift from a close family member. I had been under the (potentially mistaken) impression that you didn't have to pay tax on a private sale, and that that was the benefits of private sale over purchasing from a used car dealer...

So I guess my question is from others' experience, is tax always payable on private sales?

Thanks

[edit]
Also for those with experience, it looks like tax is based on wholesale value of a vehicle for a particular model year, and not its purchase price. In my case the vehicle is selling significantly under its average autotrader cost since it requires very significant repairs... is there a way to get around paying tax on twice as much purchase price as you actually pay??

[kingsley]

I don't have any actual experience but from what I have researched you pay only 1 tax for private sales and both taxes if you buy it from a used car place.

Unfortunately, the tax is calculated on either the purchase price or the value of the car in one of those famous price guides (I think Ontario uses blue book?) whichever one is higher. I never heard of any special considerations for cars that need significant repairs. I would doubt they have it since it is difficult to prove especially when you need to pay the tax when you register the car.

[B0000rt]

A car was GIVEN to me by my neighbour with a non-functional transmission. Basically the car would not run.

On registering the vehicle in my name, I was ordered to pay taxes (forgot which ones) on the listed value of the car, regardless of it's condition.

I believe there's only a few ways you can be tax exempt, one of which includes the car as a gift from someone in the immediate family.

I think kingsley is right, it's either the greater amount of the two. I paid $0 and the listed was $xxx, so they took $xxx as the price of the car and charged tax on that.

[chicadam]

:idea: Assuming you've done the research and this car is everything you expect for this private sale

With the seller: :arrowl:
- Check VIN to verify the car matches the ownership and all the other documents.
- Look through the Used Vehicle package for any leans or accidents, check page numbers to be sure its all there.
- Pay the seller first either with a certified chq (only can be done at your home branch) or at your home branch.
- Get the Ownership form signed by both of you
- Get Bill of sale (different from ownership) signed as well
- Get Safety Standards Certificate
- Get Vehicle emissions pass report

On your own: :arrowl:
- Once the car is yours, call your insurance company and say you'd like to add this car, then you can use your existing insurance account number as Proof of Insurance
- Bring your own plates to put onto the vehicle once the seller remove his, use that plate to at least drive home with the car or to the licensing office.
- If using your old plate bring the Plate portion of your vehicle permit
- VISA to pay for PST and other stuff if required.

Bring all of this to the licensing office and register for new plates or if possible use your old plates.

All this can be done on the day of sale.

[Coke355mL]

Purchasing a vehicle privately you will have to pay the PST. It's always been like that - unless you got this as a gift from an immediate family member. Purchasing a vehicle from a dealership you must pay GST + PST.

The amount taxable is either the wholesale price or the purchase price WHICHEVER is higher. So the least amount of tax you'll be paying is whatever the wholesale value is.

You might want to wait until after July 1st when the PST goes down.

The benefits of buying private is to avoid additional costs for warranty, safety, freight, full taxes, etc. but you still have to pay the PST.

[r1lee]

you might want to check up on this. As I've heard of people not paying taxes on a vehicle which is not "driveable" where the value of the vehicle in the black/red or whatever colour book is not the value in which the used car is in. Best thing to do is, call a mechanic or get a friend to call a mechanic and they would need to write up an appraisal of it.

[dodo]

MTO will honour the estimate price from an appraiser , how much cost to appraise, I don't know. Look at ur phone book and ask. Last time my buddy was lucky bcoz the wholesale price is zero (certain period when there was strike going on in MTO) so his tax was based on whatever he paid.

[superdeals]

Purchasing a vehicle privately you will have to pay the PST. It's always been like that - unless you got this as a gift from an immediate family member. Purchasing a vehicle from a dealership you must pay GST + PST.

The amount taxable is either the wholesale price or the purchase price WHICHEVER is higher. So the least amount of tax you'll be paying is whatever the wholesale value is.

You might want to wait until after July 1st when the PST goes down.

The benefits of buying private is to avoid additional costs for warranty, safety, freight, full taxes, etc. but you still have to pay the PST.
I think it is GST going down 1% not PST!

[ichpen]

Private sale = you pay PST (8% in Ontario) on wholesale or declared sale value (whichever is the highest). This is why you always mark down the value on your bill of sale.

Dealership = You pay PST + GST on actual value of car (most will not fiddle the bill of sale).

This has always struck me as one of the most ridiculous government money grabs ever recorded.

[Coke355mL]

I think it is GST going down 1% not PST!

Oops, you're right about that.

[superdsi]

Great List
1) Don't fall in love with a car. Next week on Autotrader another one will be up for sale. Always start at $1000-$1500 off the price in the ad.
Auto trader ads last for 2-3 weeks.I believe cars sell on the first weekend if they are priced correctly.If the price is too high, print it out and callback in a couple weeks. Amazingly the car is almost always still up for sale.

Just bought a used last month. Learned lots in the process.

Only look at a car at the seller's home or business. If he/she wants to meet you at a Tim Horton's, say no.

Make sure you know the seller's work address. Protection that you may need.With the seller:

- Check VIN to verify the car matches the ownership and all the other documents.

- Look through the Used Vehicle package for any leans or accidents, check page numbers to be sure its all there.

- Pay the seller first either with a certified chq (only can be done at your home branch) or at your home branch.

- Get the Ownership form signed by both of you

- Get Bill of sale (different from ownership) signed as well

- Get Safety Standards Certificate (have seller pay for it and make sure you are there while it is being done, don't let his Uncle Joe do the safety)-
Get Vehicle emissions pass report (seller pays)

-Make sure their is no lien, if thre is settle the Lien at the bank (buyer and seller together)

-buy a car from the original owner, make sure he/she has original bill of sale from the dealer

On your own:
- Once the car is yours, call your insurance company and say you'd like to add this car, then you can use your existing insurance account number as Proof of Insurance

- Bring your own plates to put onto the vehicle once the seller remove his, use that plate to at least drive home with the car or to the licensing office.

- If using your old plate bring the Plate portion of your vehicle permit

- VISA to pay for PST and other stuff if required.

Bring all of this to the licensing office and register for new plates or if possible use your old plates.

All this can be done on the day of sale.