Taxes on kit vs complete car in CA

[2000ltdken]

Hi guys,

I have a question about taxes on a kit vs a complete car in California.

If I were to purchase a completed car from someone for $50k I assume my taxes would be 7.75% (San Diego rate) or $3875.

If I were to purchase a kit like a ERA for $20k and put in a $10k motor and transmission, do all of the work myself like paint and assembly, would my taxes be on $30k only? Or is there some other valuation rules that I need to be aware of?


Thanks,

Ken

[Rick Parker]

The sales tax or taxes would be paid by you on the parts IF they were purchased from a business with a resale license if purchased within California. If the kit or related parts are bought from out of state (w/o) tax being collected the DMV WILL collect equivalent tax at the time the car is licensed AND they will factor in a charge for the required labor even if you did it yourself. As of 1/1/13 tax rate in San Diego county is 8.00%, statewide rates were bumped 1/4%

[Dangerous Doug]

You have to show all of your major receipts when you register in CA in order for the DMV to assess your taxes. Your taxes will be based upon the sum of those receipts. You should show parts purchased in CA but you will not be double-taxed---anything with taxes already paid will not be added to the taxes assessed by the DMV.

DD

[Dangerous Doug]

I was not assessed a tax for estimated labor, and I built my ERA. I registered a couple of years ago.

DD

[twobjshelbys]

Originally Posted by 2000ltdken

Hi guys,

I have a question about taxes on a kit vs a complete car in California.

If I were to purchase a completed car from someone for $50k I assume my taxes would be 7.75% (San Diego rate) or $3875.

If I were to purchase a kit like a ERA for $20k and put in a $10k motor and transmission, do all of the work myself like paint and assembly, would my taxes be on $30k only? Or is there some other valuation rules that I need to be aware of?


Thanks,

Ken

You will have paid taxes on other components you use (e.g., paint) at the time of purchase. The only thing you won't pay tax on is your labor.

So if you were to buy the kit and the engine, and send it to someone who puts it together for you, you will pay the same in taxes on those parts, but you'll have to pay his labor (but in most places, labor is not included in sales tax).

[LodiWino]

Remember there will be property tax paid on the value of the labor.

[kinsey]

you won't get a property tax for the labor or for any increased value your vehicle has after it is complete. if you paid tax on the kit in the state you bought it from( ERA in Conn.) you will not pay taxes again in Ca. Also if you have a motor laying around your garage you won't have to pay taxes on that either. DMV procedure varies from office to office and from employee to employee, some may accept your statement that you already had a motor others may ask for some paper trail

[2000ltdken]

Thanks for the input guys! Now I need to mull over the all the possibilities which is part of the fun.

Ken

[RodKnock]

You pay taxes on labor, but labor is free, if you do the work:

http://dmv.ca.gov/forms/reg/reg5036.pdf