Tax ( dmv question)?

Question

I have to re-finance a car and to remove someone's name on the title. I was the co-signer and primary person. My name is first and then it says or before the other name, on the registration. The credit union told me of a tax from DMV that to remove the person's name it's like I'm selling that person's share of the vehicle. since the vehicle loan is like $40,000, the tax is going to be like 3,000. everyone I know has'nt heard of this or experienced it. does anyone have any advice on getting around this or know of this kind of tax. thanks

Answer 1

It shouldn't be a problem, the record will show that tax has been paid on the car and that further tax shouldn't be collected. It's not like a normal sale of a car where the new buyer has to pay use/sales tax. Your loan documents will show how much use/sales tax was collected.

Answer 2

You should not have to pay tax. It is just a title change / correction. You will have to pay a fee for the title correction and you will need the other person to sign a release of interest (have it notarized). and that should be it.  

Answer 3

is the other person on the loan family?  because i believe there is a diff rule when its family and you can bypass the tax.  like when a parent gives a child a car even if the car is worth 10 million dollars they can "sell" it to the child for 1 dollar.