Question:

Buying a motorcycle from a friend, what is the best way to avoid or reduce taxes paid?

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the bike blue books at 5250, I'm paying 5000. should we put a smaller amount on the bill of sale? should I call it a gift? Would it help to write on the bill of sale that I bought it in say 2006?

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  1. If you say you bought it in 2006, you will probably get socked with a penalty for avoiding the tax.  Most states use the blue book value as the taxable base to avoid just this situation.  Check your state's Department of Motor Vehicles web site to see what the tax and base is and if you can use the sales price instead of the blue book.


  2. This is illegal in WA state where I live, but I have known people who have bought and sold vehicles and simply put in a low number for the sale price on the documents sent in to the state to report the sale. As long as the story  told by the buyer and seller agrees and there are no other witnesses, how can it be proved that you and the other person are lying? This is essentially a victimless crime when it comes to resale. I can see sales tax on a new item, but a used item being sold to someone else? Tax was already paid once, I see no sense in taxing the same item again simply because it changes ownership. Which, is why in my state, used vehicle prices reported to the state in a private sale are mostly lowballed in private sales between individuals though the practice is illegal, which is why you won't find this being done at a used car dealer.

  3. Lying will just get you in trouble, and they might make you pay tax on the blue book value.  Play it straight, write up a bill of sale for the amount you actually paid.

    You really don't think that the state people have figured out that people try to cheat on this, and have things in place to prevent that?

  4. call it a gift.. then you pay less taxes

  5. No because the DMV will tax you according to the blue book price.  So present your receipt for the 5k.  and pay up

  6. gift it or just put it down that you bought it from him for like 20$

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