DMV challenging purchase price of an used car for Tax evaluation?
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My friend bought a car from another friend for $500. But DMV is assessing taxes on it at its fair market value, which is $3500. Does DMV have a right to challenge the assessment and if so how do you respond to them?
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Answer:
Depending on your state, the DMV does have the authority to tax on FMV as opposed to the purchase price. In the state of Washington, taxes are always calculated based on fair market value and not purchase price. The gift rules may be an option in certain states.
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Other answers
It depends on the law in the state. Some state assess at fair market value and some at purchase price. If this state generally assesses on purchase price they may have a statute saying that the purchase price must resemble fair market value. I'm don't know the state so I cannot say for sure.
irongrama
If your friend can prove, by pictures and/or repair bills, that the car was worth much less than Blue Book, he/she might have a case if it's a state that assesses on purchase price. Otherwise, will likely have to pay.
Judy
depends on your state laws. usually no that's not allowed, because you can tell them you got it for free, and they cant charge you, but why are you doing this thru the DMV isn't it normally thru a notary when the title is transferred over?
DnBprincess850
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