Car swapping, anybody done it ? (DMV)
 

It's very theoretical right now, but thanks to the magic of internet forums, there's a guy out there with a car I want, and I have a car he wants. Value and condition are strikingly similar... But we're separated by about 1000 miles ;-(

How would you go about swapping cars with someone ? I imagine the DMV will want a cut somehow... But the legalities ??? Can you use a dealer to help with the transaction ? I imagine that would be safer.. Just curious if anyone here has done it before...

Why don't you just "loan" each other a car for a month or so? Be sure insurance is in order. Then, if you still like the deal after that period, exchange titles...

That's not really the issue, sorry if I was unclear, distance makes this impractical.

I'm wondering about the legalities/paperwork involved in swapping a car with someone, and covering your butt in terms of title, ownership, clean transaction for all. I'm also wondering if DMVs in 2 different states would make this a pain or a simple title swap, and how much of a bite they'd want out of what would essentially be a cash free operation... (minimal $$$ if any: I bet they would not like this if no money changed hands ;-)

I'm not worried about liking the car at this point, and there'd be PPIs just in case.

I'm sure any state's DMV would treat a title swap as any other "bought this car in another state" deal....no biggie, as long as clear title on both ends accompanied by a bill of sale..."for value received".

Paul is correct. To clear the sales tax hurdle in your state you will each need to list the value of the car on the correct spot on the title, or exchange a bill of sale if necessary.

You need to "gift" the vehicle. As in - I am giving this vehicle as a gift to my friend - with a bill of sale that reflects such. He would need to "give" you the other. Handle it as two separate transactions. You can draft up a contract that basically says what your intentions are. I know you can do that in Florida - as this is how I accomplished the same with my boat.

Get PPI's done, then if everything turns out cool, sell your car to him for $5, and vice versa.

I've done it - swapped my WRX Sti for my current Porsche - same value, no cash involved. DMV bases the tax on the higher of amount paid or value of the car. They also treat it as two separate sales for processing purposes.

However the contract of sale we had simply stated that the two of us had agreed to exchange titles of the cars in exchange for the value received. I can send you the words we used if it helps.

Just be aware of what you are giving away or receiving after the exchange - I swapped a high performance car which was depreciating for a slower classic car which was static in value - 5 yrs later I am so far in front $ wise of where I'd be if I still had the WRX.


Tim

That will vary state to state. Some states have gifts only from immediate family members, some value a car transaction (for tax porpoises) from the actual declared trade value, some based on depreciation from initial sticker price, etc.

Basically, spend some time searching each state's DMV website and find out what the costs are to bring various vehicles from out of state under various scenarios. Figure out which is cheapest for both of you, split the cost, and get the transaction done.

seen this done. you gift it to each other.

Not sure about your state(s) but generally DMVs tax "gift" vehicles at full book value unless they fall into certain strict categories. (Immediate family, etc.). The much smarter thing to do is to write a bill of sale for each one @ a low $$ value and treat it as a double-sale.

Definitely check with each of your DMVs first on rules. It may make sense to treat one of them one way and the other differently. If they are newer cars, a DMV can ignore the stated price and assign book value to a used car purchase for sales tax purposes. Check first...

Don't do the $1/$5 thing.

You will get a follow-up letter asking why the vehicle was sold/purchased for well below blue book, and how much sales tax you owe, or a letter of explanation detailing the transaction...

Just call your DMV, ours has a help line that's actually semi-helpful. In KS there's a bill of sale form with a seperate entry for trades. You pay the normal property tax on your new car and only pay sales tax on the cash difference (if any). Much simpler than a gift, or answering questions about your new car that cost $1. I used the process to trade a 951 for a 540i, there was nothing to it.

I am not an attorney so take this for what it is worth.

The big hurdle I see is the DMV's would be interested in collecting the sales tax for the state. A swap of equal value may or may not be taxable in your respective states. I think the best way to clear that question is contact your states Div of taxation and see how to handle a transaction that is not a money transaction but a trade for equal value.

If it were not for the possibility of paying sales tax it is a rather simple transaction.

That being said I think the easiest way to swap the vehicles and have documentation that backs up the transaction would be a simple two party contract indicating the parties involved, the year make, model, VIN and mileage of the vehicles. The contract should state the value of each vehicle and that titles are being traded and that no money has traded hands. Both parties would sign the contract in the presence of a notary along with the titles indicating the sales price of $0.00 on the titles.

Why not contact Terry BPP (or whatever his user name is here)? He's a FL dealer. I think we have other FL dealer here too.