Buying and Selling FAQs in California
Buying or selling your first car can be a daunting task. The whole experience abounds with legal responsibilities to the other parties involved in the transaction and the state government.
Below are some answers to a few commonly asked questions pertaining to buying and selling vehicles.
When must I notify the DMV that I've purchased or sold a vehicle?
You must report the ownership transfer to the California DMV within 10 days of the sale date. Either mail in a completed Notice of Transfer and Release of Liability (Form, REG 138) or notify the DMV online.
The buyer must report the change of ownership to the DMV within 5 days of the date of purchase. The transfer fees and use taxes must be paid within 30 days.
How do I figure out the use tax and transfer fees on my newly acquired vehicle?
The use tax varies with the sales tax rate in each county, so contact your local DMV for information on current rates.
Refer to California's online fee chart for the current transfer fees.
Is there anything special I must know if I am thinking about buying a vehicle from another state?
First of all, the vehicle must be certified to meet California's more stringent smog laws before it can be registered. Many vehicles are only certified to meet lesser federal emission standards, called "49-State" certified. Vehicles smog certified to California standards are referred to as "50-State" certified.
If you decide to buy a vehicle from out-of-state, keep in mind that it will be considered new if it has less than 7,500 miles, and will be subject to the pertinent registration requirements for a new vehicle.
A new vehicle that does not meet California emission standards cannot be registered in California unless it is exempt. The vehicle will be considered exempt if:
- Its ownership arose out of an inheritance or divorce settlement.
- It was purchased in order to replace your California vehicle that was stolen while you were using it out-of-state.
- It was purchased in order to replace your California vehicle that was destroyed or rendered inoperative while being used out-of-state.
- It was acquired while on active military duty outside California and registered in the last state of military service.
For more information on out-of-state vehicle purchases issues look to:
- The Department of Motor Vehicles Technical Compliance Section at (916) 657-6795
- The Bureau of Automotive Repair (BAR) at (800) 952-5210 (smog emissions information).
- The California Air Resources Board (ARB) at (800) 242-4450.
How do I register my newly acquired out-of-state vehicle?
You must first submit the following forms:
- An Application for Title and Registration (Form REG 343) with the signatures of all registered owners and the name of the lienholder, if any.
- The out-of-state certificate of title signed by the seller.
- Any bill of sale necessary to establish a clear chain of ownership.
If the vehicle is less than 10 years old, the California Department of Motor Vehicles requires the seller to disclose the odometer reading, acknowledged by the buyer).
Nonresident vehicles also require vehicle verification. Make an appointment at your local DMV so an authorized DMV official may verify the vehicle's identification number (VIN).
Lastly, make sure you have the appropriate smog certification and pay the applicable fees.
How can I determine how much it will cost to register my recently purchased vehicle?
The fees are ultimately computed by the Department of Motor Vehicles using many different variables. They cannot be accurately computed until you apply for the registration.
To calculate an estimate of the applicable fees you should refer to the Vehicle Registration Fee Calculator.
If I find the car I want to buy in another country, will it be difficult to import into the United States?
The first issue to resolve is whether or not the vehicle was manufactured in compliance with the Federal Motor Vehicle Safety Standards (FMVSS). This compliance with United Stated federal regulations is typically evident through a label attached to the vehicle by the original manufacturer.
For a vehicle other than a motorcycle or a trailer such a label would be attached on the driver side on or near the door.
A motorcycle would typically have the compliance label attached to a permanent part of the bike around where the steering post meets the handle bars.
Trailers usually have the label attached to the front half of the vehicle on the left side.
If you cannot find the label showing that the vehicle conforms with FMVSS, you should contact the manufacturer.
Vehicles manufactured to conform to FMVSS, and with the corresponding label attached, do not need to obtain prior approval from the National Highway Traffic Safety Administration (NHTSA) before importing the vehicle.
There are, though, some hoops the manufacturer must jump through prior to importation.
First, the manufacturer must have a United States resident designated for service of process. The manufacturer must also supply the necessary information to identify it and its products as subject to the FMVSS.
Furthermore, the manufacturer must submit the necessary information for the NHTSA to decipher the Vehicle Identification Numbers (VIN) of the vehicles sold in the United States.
Vehicles not originally manufactured to comply with the FMVSS must obtain importation approval from the NHTSA. The NHTSA approves vehicles for importation based on make, model, and model year.
Once a particular make, model, and year have been deemed compliant, all the vehicles in the classification may be imported.
The NHTSA only reviews submissions from registered importers in assessing the importability of non-conforming vehicles.
So not only does the vehicle have to be imported by a registered importer, or someone contracted by a registered importer, but a 150% bond will have to put up at the time of importation to ensure that modifications to bring the vehicle into compliance with FMVSS will be made within 120 days.
Why do I need to go through a registered importer to import my vehicle that does not presently conform to federal regulations?
The registered importer will assess the:
- Feasibility of bringing the vehicle into compliance with the FMVSS.
- Costs involved in submitting the vehicle for importation with the NHTSA.
- Costs of conforming the vehicle to federal standards.
Furthermore, the federal government requires it.
To learn how to become a registered importer visit the National Highway Traffic Safety Administration website.
I'm planning on getting a new energy-efficient hybrid vehicle. Are there any tax breaks available?
Hybrid tax credits ended on December 31, 2010.
I'm doing my taxes, and I really need another deduction. Can I deduct my vehicle registration fee?
You can deduct a portion of your vehicle registration fees. According to the IRS's Publication 17, you can deduct the portion of the registration fee that is based on your car's value. The IRS counts this as a personal property tax, even if your state calls it a "registration fee" or a "usage fee" for the privilege of using the roads.
How much can you deduct? You can deduct the portion of your registration bill called the Vehicle License Fee. Ignore the laundry list of other fees; these don't count for a deduction.
To find the fee, look on your registration renewal form; this piece of paper itemizes your fees. If you can't find your renewal notice, use the DMV's online fee calculator or please call (800) 777-0133 to determine what fees are due.
If you have questions about how to take deductions, contact a tax professional or the IRS.
- REG 343
- REG 138