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Curious in Kansas

Yahoo Message Number: 35480
Just for us folks in the Midwest, give me the short story of what this California out of state rule is? What are you after in the end ? AL

00 affinity #5851

Re: Curious in Kansas

Reply #1 –
Yahoo Message Number: 35481
If you keep a motor home, boat, airplane, car out of the state for a given amount of time. It use to be one year, now it looks like it is back to 90 days, you are exempt from state sales tax which is around 7.5%, depending on which county you live in. You can not bring the unit back into CA during that time, and are you are supose to stay with the unit, and to show that you should have recepts of your travel food lodging fuel ect. I know people that have purchased boats and RVs in state, and take posestion out of state, I do not care to get into the argument of if this is socialy correct , or not.
John 31060

Re: Curious in Kansas

Reply #2 –
Yahoo Message Number: 35482
Quote
I do not care to get into the argument of if this is socialy correct , or not.
It is actually a double edged sword. Politicians in California would love to tax the sales and get rid of the ninety day rule but they discovered to do so would deny the state of California a lot of sales.

Why would a resident (or business) living in a state that has no sales tax purchase in one that does when they have alternatives.

Motor homes are only a small piece of the pie. The law is written around the word 'vessel' and therefore includes boats, planes, airships, trains and motorized vehicles.

The objective of the law was to make sure out of state commerce was not impeded. At the same time they obviously wanted to make sure customers didn't take delivery out of state on one day and return the purchase to California the following day.

For most purchases this works well but motor homes pose a specific problem. They are frequently purchased by people who can easily live out of state for ninety days (ninety-one to be safe) and can legitimately claim the exemption.

The thinking must have been that by extending the limit to one year a lot of people would go ahead and pay the tax. But that does not help sales.

The real answer in my opinion would be for California to recognize that motor homes, trailers and fifth wheels (with kitchens and bathrooms) be treated the same way as stick or brick homes. No local sales tax but revenue for the state would be via DMV registration thus spreading out the burden throughout the life of the vehicle rather then up front.

My late Father once gave me a very sound piece of advice. I was complaining about my IRS bill.

He said "Don't complain about paying taxes. If you owe tax that means you have made a lot of money.

Just make sure you don't pay more tax then legally required"!

My Dad was a smart man.

David

Re: Curious in Kansas

Reply #3 –
Yahoo Message Number: 35483
What I don't understand is what makes the buying and selling habits of Californians so different from people in many other states. MA has both a sales tax and an excise tax with no out of state ruling at all that I know of. The only exemption to sales tax on vehicles is that you can transfer the ownership between members of the immediate family for $1 to cover title rules. To register a vehicle in MA you must pay the sales tax on any portion of the sale price that has not been taxed before. For example you only have to pay on the difference you are paying when trading a vehicle. The rest of the value of the new vehicle was covered by the tax paid on the old vehicle. If you buy a vehicle and the price you pay is not in line with the actual value then the registry will charge you sales tax on the book value.

The excise tax is often called a personal property tax in some areas. This may spread the tax burden out over the useful life of the vehicle but reducing the value of the vehicle by 12% per year only takes a couple of years before the up front sales tax look like a pretty good deal.

For the above reason Massachusetts is often called Taxachusettes but I don't know that sales are suffering to any degree because of taxes except with full timers that often choose the cheapest state that they can satisfy the registration rules and keep on the move.

I think that the oil companies are walking proof of how little effect tremendous monetary burdens actually have on the average American's love of their various forms of vehicles. What is so different in California?

Don Seager
2004 Allure 31046

Re: Curious in Kansas

Reply #4 –
Yahoo Message Number: 35484
David,

Your Dad's statement--"Just make sure you don't pay more tax then legally required"!--precisely stated, makes the case for the Montana LLC. Well put!

Dave Trotter

01 Intrigue 11215

Re: Curious in Kansas

Reply #5 –
Yahoo Message Number: 35488
The difference, Don, is that in CA sales tax is paid on the selling price of the vehicle. Example, if you buy a $500,000 coach---have a trade in worth $300,000. In most states you would pay tax on $200,000, but in CA you would pay tax on the selling price of $500,000. Doesn't matter if it is new or used, the selling price is the taxed amount.

Jurhee

2005 Magna 6480---registered in Texas

Re: Curious in Kansas

Reply #6 –
Yahoo Message Number: 35495
Ahhh I see. Double dipping. You are paying twice on the $300,000. Just curious as to what happens if you sell me a $300,000 vehicle for $1 because you are my brother for instance. Would the basis for sales tax be only $1?

Don Seager
2004 Allure 31046----Not registered in MA or NH

Re: Curious in Kansas

Reply #7 –
Yahoo Message Number: 35497
No way. If a value clearly does not match the worth of the vehicle the DMV will use Kelly Blue or other source to assess a value and then charge accordingly.

I should point out that the same rules apply with automobiles. If you trade every two years you will pay sales tax on the full retail price of the vehicle you purchase regardless of the trade in value and also pay higher registration fees.

Californians pay a high price for the privilege of living in earthquake country.

David

Re: Curious in Kansas

Reply #8 –
Yahoo Message Number: 35498
In the original example of the $500000 motorhome with $300000 trade-in here is the MA situation.

MA would tax you 6% on the difference of $200000 or $12000 but you would receive in that 1st year of ownership an $11250 excise tax bill from the state but paid to the town. The excise is calculated at $25 per thousand on the fair market value times 90%. I used the $500000 sales price just to get a reasonable comparison between CA and MA. So your taxes in for the first year would total $23250. During the second year of ownership the excise is now at 60% or $7500. Cumulative taxes through the 2nd year 30750. The 3rd year the excise is at 40% or $5000. Cumulative taxes by the 3rd year of ownership is $35750.

Now I based the CA sales tax on 7% of the sales price because someone said that it varies from county to county but that seemed like a realistic value. If my math is correct and it often isn't, that is a sales tax of $35000.

So by the 3rd year a MA resident would have already paid more than the CA resident by $750 and it doesn't stop there. The fourth year the excise drops to 25% and in year 5 it is 10% and continues at 10% until you dump it. By year 5 it would by a cumulative tax of $39000.

And the MA resident doesn't get the earthquakes as a bang for his /her buck. Historically though MA experiences far more earthquakes than CA but they are all very small thank heavens.

Don Seager
2004 Allure 31046

Re: Curious in Kansas

Reply #9 –
Yahoo Message Number: 35499
Hi ALL,

For a comparison - let's see what Alaska offers.
Less than $200 for registration for 2 years, no sales tax and if you are over 65, registration is free for 2 years, no smog checks outside Anchorage for gasoline vehicles and Anchorage is stopping smog checks in 2010.
Fred Kovol
 

Re: Curious in Kansas

Reply #10 –
Yahoo Message Number: 35535
The annual reduction of taxes on "tags" (license renewal) is based upon how old the unit is. (value=purchase price that you paid and reduced each year.)
When you buy a new unit for example a Country Coach for $500,000, CA invites you to contribute to them $38,750 ( and more if you are in certain districts) So if you buy a new rig every two years -the first yr. is $38, 750. Year #2 is app. $4000. for tags- the next yr. you buy a new rig and again you get to pay $38,750! Now it would be nice if they either credited the tax on trade in (such as WA) but oh NOIOOOOOOOOOOOOOOO! They want the full tax! There are specific rules to keeping it out for in excess of 90 days.
  • Keep all receipts-which must be submitted to get a BOE 11 certificate t give to the DMV or they will not give you registration in CA
  • Keep track of mileage and they will inspect the odometer. (This keeps you from collecting receipts for fuel , dinners , etc from friends.
  • You can bring it into CA under certain exceptions. Repair work-provide receipt and prove that yu were only in CA so many days to get the work done- OK in used, but why would you want to do this when warranty is covered by Junction City on a new rig?
You can get more info by websiting CA State Board of Equalization-but new rules are not yet on site-but 1 yr rules are same -just shorter.
( I work with this board frequently -trying to figure out taxing for my son's cabinet shop-smaller than Davis) NO tax on installation- where is the cabinet being installed? Tax based on manufacture price and county it is to be installed in!)
We paid the full taxes on the 2006 Allure 430 (law was 1 yr.) One year Lon & I had 2 motor homes, 3 cars, 1 truck- more than $3000!
So we thought we would travel our usual 4-5 months and save some big bucks!

Chris & Lon Cross-2006 Allure 430 31417