I am in California, and the state has recently decided to up the vehicle license fee and sales tax. We now will pay 1.15% of the vehicle's value to license it. Sales tax is now at 8.75% or more, depending on county.
I am in the market for a used vehicle and am trying to figure a way to reduce my tax burden legally.
I am looking for vehicles, and noticed that many of them come with optional warranties. If I was to negotiate a deal with the dealer to knock down the price of the vehicle and pay a premium for the warranty, wouldn't that knock down the sales tax and VL fee?
If a truck was listed for $10,000 I might offer $7000 for the truck and buy a warranty from the dealer for $3000. This way the recorded price for the vehicle would be $3000 less....and that would be reflected in lower tax and VL fee costs.
One does not have to pay for tax on a warranty, correct?
Is this legal? If not, should I care?
I know a LOT of private sales do not get recorded correctly between buyer and seller for the purpose of saving the buyer $$ when it comes time to pay sales tax when the title is exchanged. This seems like a legal and pretty straight forward way of getting some well deserved tax relief.
"I got a hell of a deal on the truck, but the warranty was a rip-off!"