No taxes on new build?
 

I thought I read on a thread last night, that in Texas you don't pay taxes on a newly built car. It sounds improbable. Am I high? If I did read that, is the poster high?
Dean

OK, I found another thread pertaining to this. Wow!

You are correct, no taxes when the assembled vehilce is FIRST titled. Think about it, when ford and gm build a car they dont pay taxes on the car, it is the second subsequent owner which does. Total registration and title is about $150 bucks. Do a search and you will find detailed instructions on how to tilte in texas it is very easy.

You will pay taxes on the parts you buy in state (usual sales tax). Not the parts you buy out of state. Right?

Correct. In Texas you pay sales tax on goods. Out-of-state merchants typically do not charge sales tax unless they have a Texas business location (like Home Depot online.)

Sorry, your getting bad advice. Texas is like most other states, a sales/use tax system. Out of state purchases are your resposibility to pay sales tax on.

Typically you just bring all this stuff (receipts) to the DMV and pay what taxes are due on the major components (engine, trans, body and frame).

Unless your building it for resale (like GM, Ford, ect.), the taxes are due. No point fooling around with the tax people, the penalties are murder. (typically double the original tax + 1~1.5% per mo.)

Sorry if I'm ignorant of some loophole in the Texas tax codes but I just checked this stuff on your state's dept of revenue site.

No loophole
 

It's not a loophole. One of the employees at my local license office was very familiar with the law and you can look up the Texas law for yourself online.

The law states: (Example is a truck being built)

The taxpayer pays Limited sales and use tax on each part or accessory ordered to build a motor vehicle. No motor vehicle tax is due when the taxpayer (builder) initially titles the truck.

NOTE: The only time motor vehicle tax is not due on a homemade motor vehicle is when the vehicle is initially titled by the person who actually built it. Once a vehicle has been titled or registered by the person who built it, motor vehicle tax is due on all subsequent sales.


It goes on to say if you custom order a car to be built then you do pay tax because you are not the builder.

When I registered my car, I provided the green sheet (inspection), a copy of the receipts for the rolling chassis, engine, transmission and the original MSO. I then wrote a check for $105.30.

Not correct.

1. If you buy parts from an entity who holds a Texas sales and use tax certificate (like a business) then you will pay 8.25% sales tax on any parts and components you purchase in the state of Texas for your build. You are not taxed again on these parts when you register the finished car.

2. If you buy goods for your build from out of state, Texas has a sales/use tax requirement that says you are obligated to pay sales tax on that as well. The local tag office will NOT attempt to collect that, you must file form 01-156, Texas Occasional Use Tax. (Would all the idiots who are filling out this form and voluntarily paying sales tax on the Rolexes you bought in Mexico please stand up?) I would like to meet one Texas resident who has EVER filled out and filed this form.

3. When you go to title and register your car, if you BUILT it, you do not have to pay sales tax on any of the parts or the car itself because you are the builder. You do NOT pay tax on the engine, frame or body. The local tag office is not even set up to collect the sales/use tax anyway, it has to be filed on the above mentioned form.

4. If you attempt to register a roller (Superformance, Backdraft, etc) you will be asked to show your MSO and your bill of sale for the roller. If you did not pay sales tax on the roller, you WILL pay 6.25% Texas vehicle sales tax on the roller at the time of registration.

HMMMM.. well I was going to file a refund request through the Texas Comptrollers Office to get back the 6.25% motor vehicle sales tax I paid, but then again, they might then turn around and want the Occassional Use Tax instead since most of my kit and parts were purchased from out of state! Nevermind, the state can keep the money I guess...

Joe - -

You are not taxed on the roller another misinterpertation. It is a component just like the engine or tranmsission. Dadmfw is right on. $108 dollars period.

I understand.. My point is this.. I have already paid 6.25% and my money is now with the Texas Comptrollers Office. Yes I could file for a refund since it wasn't suppose to have been collected, BUT, the Texas Comptroller could then turn around and expect to be paid Sales Tax on the out of state purchases (two different kinds of tax) which is actually more than what I already paid tax on. Normally what they don't know won't hurt them. In this case I would be in effect telling them that I made out of state parts purchases and shouldn't be subject to the 6.25% motor vehicle sales tax and they could turn around and want their Occassional Use Tax money. I think you have to fight your battle before the Texas Comptrollers Office gets your money..

It's really complicated to explain my deal, but I think it's best for me to let sleeping dogs lie.

Joe - -

If you dodged paying taxes on a roller (Superformance/Backdraft etc) you are lucky. I called the Harris Cty Assessor at Steubner Airline and Cypresswood this morning for clarification on the sales tax issue and they said that tax is to be charged on any vehicle that is built by a manufacturer and supplied with an MSO.

Doesn't surprise me one bit. Unfortunately the title and registration laws are interpreted different ways all over the state. If you want them to do something other than what they "believe" is the correct interpretation, you have to fight a HUGE bureaucratic nightmare called the State of Texas.

Joe - -

Everything's bigger in Texas, right? Including vehicle titling and taxing incompetence.:JEKYLHYDE

I dodged nothing. The roller is not a car, the engine is not a car, the transmission is not a car. It is only when they are assemlbed together, BINGO, assembled vehicle do they become a car. If the roller was a car it would never be allowed into the US. It does not meet any side impact regulations etc. For a fee of $100 us dollars I will send you in US mail the tax code and illustrations from TXDOT. $100 is cheap compared to 6.25% sales tax. I am just so tired of sending it to people I figured it is time to make money.

Walk into the court house with the tax code you will fight nothing. Texas is very generous when it comes to titling assemlbed vehicles. If fact on the application for Texas Title when it says tax due you check exepmt, and write assemlbed by applicant. Even if you paid someone else to assemlbe you orchestrated the activity, this is another example in the TXDOT illustrations. If anyone lives close to Houston the courthouse in Pasadena close to shaver and hwy 225 knows exactly how to title them. The idiots by SAN JAC have no clew.

I have done 4 SPF rollers and I had to pay sales tax on the roller and had to show purchase documents on the engine and transmission and green sheet. One of the rollers I traded a Harley on and only paid sales tax on the difference. Tried different tax offices with-in Collin county and all had the same book to look it up in. I do agree sometimes you get a person that doesn't understand or read it very well and you may be lucky to pay something much less as some of our Dallas buddies have experienced that over the years.........

I went to the sub-courthouse in Burleson, Texas today after reading some of the above posts and getting motivated! I took the print outs (tax code) with diagrams that are easily found on the Texas Comptrollers web site with me.. The woman says she's been doing her job for 25 years and knows what the laws say and knows her job. She said to call the 1-800 number in Austin if I didn't believe her. So yes, some sub-courthouses WILL require a fight! People are people..

Joe - -

County tax assessors are charging sales tax to first time registrants on rollers and kit cars in Texas every day. If you show up with an MSO, you are as likely to be charged sales tax as a guy with an MSO on a new Ford pickup truck.

I was attempting to buy a SPF from an individual in Texas. I ask the courthouse how much he paid in taxes they said none. First time an assembled vehicle is titled no taxes. EXTREMELY BRIGHT LIGHT WENT ON and I quickly realized I could save over $3k in taxes do a new one than buying his since I would have to pay taxes on his. Besides the fact he sold his out from under me after I helped the kok suker straighten out his title and get 1965 replica under remarks I just ordered an new one and the difference in price was $2k after since I did not have to pay taxes so in the end I was better off anyway with him being a liar. Glad he had that little fish on his suburban, maybe he can buy his way out of hell on sunday during church, lol!!