Quote:
Originally Posted by 2000ltdken
Hi guys,
I have a question about taxes on a kit vs a complete car in California.
If I were to purchase a completed car from someone for $50k I assume my taxes would be 7.75% (San Diego rate) or $3875.
If I were to purchase a kit like a ERA for $20k and put in a $10k motor and transmission, do all of the work myself like paint and assembly, would my taxes be on $30k only? Or is there some other valuation rules that I need to be aware of?
Thanks,
Ken
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You will have paid taxes on other components you use (e.g., paint) at the time of purchase. The only thing you won't pay tax on is your labor.
So if you were to buy the kit and the engine, and send it to someone who puts it together for you, you will pay the same in taxes on those parts, but you'll have to pay his labor (but in most places, labor is not included in sales tax).