1. Determination of Value:
Before calculating your tax liability, you need to determine the value of the used car. This is typically done using the Arizona Department of Transportation (ADOT) Motor Vehicle Division's (MVD) pricing guide. You can access the pricing guide online or contact your local MVD office to obtain it. The guide provides the average retail value for different makes, models, and years of vehicles, based on their condition.
2. Calculating Sales Tax:
Once you have the value of the used car, you can calculate the sales tax. Arizona's state sales tax rate is currently 5.6%, but counties can add their own additional tax rates. For instance, Maricopa County has an additional 1.5% sales tax, making the total sales tax rate 7.1% in that county.
Here's the formula for calculating sales tax on a used car from a private party in Arizona:
Sales Tax = Value of the Car x Total Sales Tax Rate
3. Paying Sales Tax:
When you purchase a used car from a private party, you're responsible for paying the sales tax. You'll need to bring the following documents when you go to the MVD to transfer the title and register your car:
- Title for the used car
- Proof of sale (e.g., a Bill of Sale)
- Insurance policy for the car
- Valid Arizona driver's license
- Sales tax payment (this can be paid by cash, check, or credit/debit card)
Note: You'll have up to 30 days from the date of purchase to transfer the title and register your car. If you fail to do so, you may incur additional fees and penalties.
It's important to accurately determine the value of the car and calculate the sales tax as any discrepancies can lead to issues during the registration process or potential tax liability in the future.
