How N.J. taxes your car purchase

Ask NJMoneyHelp

Photo: shot/morguefile.com

Q. What sales taxes are due to New Jersey on a car that is bought out-of-state? It’s a used car on which taxes were paid by the original owner.
— Driver

A. You’re not going to like this.

The original owner’s cost and tax paid are irrelevant according to the state of New Jersey, which always likes to get its piece of any tax pie.

“Unfortunately, there is no credit or refund for taxes that were already paid by the current owner,” said Dean Shah, a certified financial planner with Stonegate Wealth Management in Oakland. “Tax is due wherever the car is registered, in this case, New Jersey.”

When purchasing a car from an out-of-state dealer, Shah said, the dealer will apply tax to the appropriate state, assuming the dealer is authorized to collect New Jersey sales tax. If the dealer is not authorized, no sales tax will be due at the purchase, but instead upon titling the vehicle.

“In the event a car is purchased from a private seller, no tax is paid to the seller, Shah said.

Then when the title is brought to MVC to register the vehicle, New Jersey tax, currently 6.625 percent, is due, as are title transfer fees.

Hope you enjoy the new wheels!

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