I'm looking into what is involved with trading cars in Texas, there's a gentleman interested in trading his S2000 for my car. Not sure if you can just make an even trade and not pay taxes on it... laws keep changing so I don't know if you can do that any more.

I've done a bunch of searching around and come up with a pretty inconclusive answer as most of the info I found was a couple years old. Any of you guys know anything about this?

Apologies if this is not the right forum, feel free to move the thread.

 

What part of Texas?

 

Austin, though AFAIK it's the same anywhere in Texas.

 

You can agree to sell the cars to each other for a low amount ( a token amount is $1.00) In the simple contract (you can even write it out for evidence later) specify the token amount and mention "other consideration' of whatever you want. Friendship, religion, politics, military, whatever. (This legally makes up for the below market value of the cars) This happens all the time for in family or in "friends/acquaintances" selling a car for a buck. Many states see this so they make it part of the DMV process an easy transfer between family members. You can still do it with someone else. You sell or transfer ownership of something for something else: consideration. That can be something tangible or intangible or both.

You then re-register and pay whatever taxes are required.

 

Well, take a look at the exemption purposes referenced by the 2nd form here: IRS 501(c)(3)

How would that work if we say we're friends or something like that?

 

There is no sales tax on trade-in value in Texas so it seems this is two trade-ins, therefore not taxable. That is how I would approach it and let them argue it when you reregister the cars. Last time I registered one there they asked me the value and just wrote what I told them.

 

Texas now has an alternative minimum tax for vehicles. I was given a vehicle by a relative and they made me pay taxes. I then sold said vehicle to my little brother (I know that sounds odd, like I took advantage of him, but it was a character building thing. He had already gotten several hand-me-down cars from me and he mistreated them, so I made him buy this one so he'd have some skin in the game) for a few hundred bucks and they made him pay the minimum tax as if he bought it for the market value.

 

I traded a car for my S about 7 months ago in San Antonio.

The process is simple:
1: print two title transfer forms
2: have the owner of his/her car fill out the information
3: swap forms
4: put your signature and check the box for "trade"
5: each of you now signs your vehicle's title
6: sign and date each others bill of sale (not needed by the state but good protection).

Its that easy. That gets you out of paying sales tax on "standard presumptive value" of the vehicle. I cost me ~$90 to change the title over to my name and register is at tis-dale here in town. No sales tax to pay, just a small fee for trading cars.

Keep in mind this was an even trade. Obviously if money changes hands it complicates things.. Or you break the law and don't claim it.

Sent from my Nexus 5 using Tapatalk

 

The above post is a good one.

You'll have to pay sales tax when you register the new car, but that's they way it goes. Did you carfax the VIN? Have him scan the front and back of his title and you do the same.