Minnesota Sales Tax on a Gifted Vehicle

January 7, 2008 5:11 PM

Did I have to may Minnesota sales tax on the car my mom gave me?

Mom bought the car new in April 2007. She gave it to me in December. We completed paperwork with Mazda America Credit to transfer the loan to my name.
When I transfered the title today, I was charged 6.5% sales tax on the value of the remaining payments (about $12,000). Since it was a gift, should it have been taxed?
Minnesota Revenue says:

The transfer of a motor vehicle between individuals is exempr if the transfer is a gift for no monetary or other consideration, or other expectation of consideration.

Is my taking over the loan "consideration"?

posted by Coffeemate to law & government (5 comments total)

Is my taking over the loan "consideration"?

Yes. Taking over the loan is a monetary consideration that you've exchanged for the car. You're paying for the car, every month. You don't pay for gifts.
posted by toxic at 5:20 PM on January 7, 2008

You aren't, however, paying for the 7–8 months of payments your mom already made. That's the gift. Although depending on the term of the loan, that might not actually be as much as the car has depreciated in value. It's possible that this gift has negative value (sorry).
posted by grouse at 5:26 PM on January 7, 2008

When i was a kid, in MN, I was under the understanding auto transfers were tax free from parent to child or vice versa. perhaps someone wasn't aware that was the case?
posted by thilmony at 6:26 PM on January 7, 2008

" When i was a kid, in MN, I was under the understanding auto transfers were tax free from parent to child or vice versa. perhaps someone wasn't aware that was the case?"

It's not a transfer; it's a purchase. Coffeemate bought the car from her mother for $12,000; that purchase is taxed.

You have my sympathies, Coffeemate. It sucks to get dinged that extra 6.5%.
posted by mr_roboto at 6:47 PM on January 7, 2008

Lame. I had been told my one woman at the DMV that I wouldn't have to pay the sales tax, but then when I got everything in order and went to finish the transfer today, I got hit for the 6.5%. Thankfully the car is worth more than $12,000, so I'm not upside-down.
Thanks, everyone.
posted by Coffeemate at 6:58 PM on January 7, 2008