25 Feb Do I have to pay sales tax on a car that was gifted?

Q. My uncle is in hospice care and my grandmother is his power of attorney. He had a 2006 Corvette that he purchased in Pennsylvania. My grandmother gave me the vehicle and the title was still in the name of the dealer in Pennsylvania. My uncle never registered the car because he bought it right before he got sick. I am planning to get the title flipped to New Jersey. Do I have to pay sales tax? A. He never had it registered, I believe this is because he purchased it right before he got sick.
— Doing it right

A. We’re sorry to hear about your uncle.

When your uncle bought the vehicle, he should have paid sales tax as part of the purchase price.

If he did not, then the tax will be due, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

New Jersey does not charge sales tax on vehicles that are gifted, he said.

The sales price must indicate “gift,” he said.

“The New Jersey Motor Vehicle Commission may request documentation of the gift,” Karu said. “While it may be too late, my advice would not have been to gift the car to you, but rather for you to receive it as a bequest after he passes.”

Assuming he was a New Jersey resident, there would be no inheritance tax on a bequest to a linear descendant which includes a wife, child, grandchild, parent and grandparent. But nieces and nephews are considered Class D beneficiaries and generally incur a tax on inheritances of $500 or more

We’re guessing the car is worth more than that, so you should consider the difference in what would be owed in inheritance tax versus paying New Jersey sales tax.

Email your questions to .

This story was originally published on Feb. 25, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.