Birthday Tax Goes Away: New Tax Heads Your Way
All vehicles purchased in Georgia on or after March 1, 2013 and titled in the state will be exempt from sales and use tax and the annual ad valorem tax.
"House Bill 387 was actually passed last year and will go into effect on March 1st, tomorrow actually," says Wade McCord , the Chief Deputy Commissioner for the Bibb County Tax Commissioners Office.
As an alternative, title holders will pay a one-time title ad valorem tax also known as the TAVT, the cost is based on the value of the vehicle.
"I'm not going to call it a large bill that has sweeping changes, but it did impact registration," adds McCord.
One major change in the taxing practice is that TAVT applies regardless of where the vehicle is purchased.
"With private sales and dealer sales, that is where the buck of the change is going to affect our tax payers," says McCord. In the past vehicles purchased through a private sale were exempt from sales tax now private sales will be subject to the TAVT.
"And what is does is basically takes the place of the sales and use tax, it is calculated at 6.5 percent of the sales price," he adds.
There’s one exception to the rule. If a taxpayer buys a car from your family member for a set price the taxpayer can continue to pay the annual tax on the car, or you can opt into the new taxing practice.
They only catch is that either way the tax is based on the state’s calculation of the value of the car, not what was actually paid.
"So you may pay 8 thousand dollars for the car the state says it's worth 10 thousand dollars you are going to pay the tax at the time of the title transfer or you won't be able to transfer the title, you are going to pay it on the 10 thousand dollars," says McCord.
For owners that purchased their care prior to January 1, 2012, your taxes will stay the same. If you purchase and titled a vehicle in Georgia between January 1, 2012 and March 1, 2013, you may be eligible to opt-in to the new title ad valorem tax.