How does car sales tax work in Michigan?

I live in Ohio.  If I buy a used car, the purchase amount written on the title/transfer is the amount that I pay sales tax on.  That sales tax rate varies by county of residence but as an example, my county would require 6.75%

In other places, the state assigns a value to the car regardless of what the purchase price was.  So, if you buy the car for a low $2k the tax is the same as if you buy the car for a higher $8k.  

How is it in Michigan for Michigan residents who buy a car?  

Michigan is 6% of the purchase price or retail price (whichever is greater) technically. The title has a spot that you write the price on it and they've always used that to calculate tax when I've gone to the SOS.

I assume if it doesn't look funny, then they don't bother looking up a retail price or anything. 
 

bonus: if you buy from family it's tax exempt! I recently lucked out with this because I didn't realize mother in law qualified for that law/policy. 

6% sales tax on the price of the car.  Same rate anywhere in the State, no variance by county or location.  You don't get to offset the cost of the car you are trading in, if you do that.  I may be ultra liberal, but I find the concept of paying tax on a used item, that's already had tax paid on it, to be criminal.

The proof for the sales price is either a receipt, from a dealer etc.  Or if you are buying private party there's a space on the title for the PO to write the sales price along with their address, mileage etc.  Standard practice is for the seller to leave it blank so you can put in what you like.  When I bought a car for my daughter last year the seller filled in the real price.  When I went to the Secretary of State the woman at the counter actually laughed when she saw the same handwriting in the sale price as the rest of the info.  She even said to me 'he screwed you by filling that in didn't he'.

In reply to Adrian_Thompson (Forum Supporter) :

This will be an Ohio titled private sale to a MI buyer.

Ohio requires the title to have a sale price on it (written by the seller) at time of title sign off. 

I suspect that this is to offset the game played in MI. However, my thoughts are similar to yours on the topic of double tax and this is a "friendly sale" so I want to do what is best for the buyer. 

I think I have my answer. But, just to check...

• If the title says $2k purchase then 6% of $2k
• If the title says $5k purchase then 6% of $5k
• If the title says $8k purchase then 6% of $8k

This is for all the same car that could have a price range of $2k trade in value to $8k perfect high retail.

Correct?

you pay the tax for the state you register it in. MI collects ohio tax if you get it at a dealer, you will be charged the sales tax as where your driver license is from. the company pays OH for you the tax essentially. 

Adrian_Thompson (Forum Supporter) said:

  I may be ultra liberal, but I find the concept of paying tax on a used item, that's already had tax paid on it, to be criminal.

<rant> I agree!  It's even worse here in CT, as we have an annual tax on cars/boats/trailers.   I don't know when they instituted that one, but I wonder how they got it passed without a revolt?  </rant>

Typically if the values differ greatly provide some photos and paperwork stating a "true" value, ie-salvage, poor condition, roller, etc. Most times I've had a differing value, I'd show a few photos and no problems.

John Welsh (Moderate Supporter) said:

In reply to Adrian_Thompson (Forum Supporter) :

 

• If the title says $2k purchase then 6% of $2k
• If the title says $5k purchase then 6% of $5k
• If the title says $8k purchase then 6% of $8k

This is for all the same car that could have a price range of $2k trade in value to $8k perfect high retail.

Correct?

Yes. I paid $6 on my $100 Miata, and $30 on my "$500" BMW. No top-dollar limit/relief that I have heard of

WonkoTheSane (Forum Supporter) said:

Adrian_Thompson (Forum Supporter) said:

  I may be ultra liberal, but I find the concept of paying tax on a used item, that's already had tax paid on it, to be criminal.

<rant> I agree!  It's even worse here in CT, as we have an annual tax on cars/boats/trailers.   I don't know when they instituted that one, but I wonder how they got it passed without a revolt?  </rant>

That sounds more like a property tax than a sales tax, IMO.

I wonder how that works when selling a car out of state and the taxes are delinquent.  Is the seller then responsible for them for the state to clear the title for transfer, or the buyer?

Adrian_Thompson (Forum Supporter) said:

Standard practice is for the seller to leave it blank so you can put in what you like.  When I bought a car for my daughter last year the seller filled in the real price.  When I went to the Secretary of State the woman at the counter actually laughed when she saw the same handwriting in the sale price as the rest of the info.  She even said to me 'he screwed you by filling that in didn't he'.

I think the first time I did this when I was 18YO, I wrote $50 in for an at the time 12/13 year old Geo Prizm and nervously mentally prepared to make jokes based on the common perception that Geo's were junk, etc. to cover me in case they questioned it. Didn't matter though... The lady looked at the title, then said something to the effect of "A Geo for $50?! You got ripped off!" Since then, according to the State of Michigan, I've never paid more than $200 for a car from a private seller.

It's such an accepted practice that I've had more than one seller try to use it as some negotiating tactic, like "if you give me $X amount, I'll leave the price on the title blank. They won't ask what you actually paid, I promise".

I guess they weren't aware that aside from accepting titles with absurdly low prices or dates written in different color ink or handwriting, the MI SOS will also take them with crossed out "mistakes" and corrections written somewhere in the vicinity. How do I know? I bought a car where the seller filled in a bunch of stuff wrong (IIRC, like putting their info in the buyers spot, among other errors) and didn't want to deal with getting a new copy, so they butchered it up darkly scribbling stuff out and writing around it in open spaces. I was almost certain it would be red flagged and I was prepared to have to fill out a TR-205 ("ownership certification") form. When I took it up, the lady looked kind of perplexed for about 3 whole seconds, then said "Oh, all the info's there, should be fine". And that was that.