Vehicle Taxability - Casual Sales     

What is a casual sale?

“Casual sale” is a sale of tangible personal property by a person not engaged in the business of selling such tangible personal property.  While most casual sales are exempt from sales tax under R.C. 5739.02(B)(8), that provision specifically excludes the transfer of a motor vehicle from the definition of casual sale.  As a result, a motor vehicle purchased in a casual sale is subject to sales or use tax, and the tax must be paid to the clerk of courts at the time of title transfer.

The definition of “casual sale” is found in R.C. 5739.01(L).

The definition of “price” is found in R.C. 5739.01(H)(1)(a).

Below are examples of the most common taxable casual sales:

1.) Cash

John purchased a car from a motor vehicle dealer in 2011.  He paid all applicable sales tax at the time of purchase.  In 2013, John sold the car to Sue for $10,000.00.  When Sue transfers the title from John’s name into hers, she must pay sales tax on the $10,000.00 price to the clerk of court's title office. 

2.) Trade

Tim and Scott have agreed to trade their vehicles.  No money will be exchanged because they feel this is an even trade.  When Tim and Scott transfer the titles into their names, they must pay sales tax on the fair market value of the traded vehicle to the clerk of court's title office. 

3.) Bartering

Steve is building custom cabinets for his friend Rick.  Rick has agreed to give Steve his vehicle in exchange for the cabinets instead of paying him in cash.  After the cabinets have been installed, Steve will receive title to the vehicle.  When Steve goes to the clerk of court's title office, he must pay sales tax on the fair market value of the services he provided to his friend Rick.

4.) Loan Assumption

Betty has a loan on her SUV. She has decided to sell her vehicle to Jeff.  Betty and Jeff go to her finance company and have the loan refinanced in his name. No money changes hands and Betty is not making a profit from the sale. When Jeff goes to the clerk of court's title office, he must pay sales tax on the balance of the loan he assumed.

 

Frequently Asked Questions Tool

The Ohio Department of Taxation has compiled a list of frequently asked questions covering many different categories.

To view the questions, click on the "Select Category" bar and then click on  the category you are interested in.  A list of questions will appear pertaining to that category. Then click on the question you are inquiring about and the answer will appear.

What is included in the "price" of a motor vehicle when calculating the sales and use tax?

“Consideration” or “price” means the aggregate value in money of anything paid or promised to be paid or delivered in exchange for the transfer of either title to or possession of a motor vehicle, all-purpose vehicle, off-highway motorcycle, watercraft, outboard motor or personal watercraft.  “Price” includes manufacturer’s rebates.

A trade-in allowance reduces the price only if you are purchasing a:

    1.  New motor vehicle, all-purpose vehicle or off-highway motorcycle; OR

    2.  New or used watercraft, outboard motor or personal watercraft from an Ohio licensed watercraft dealer. 

The sales or use tax is computed upon the total amount of consideration, whether in cash, by exchange (trade) or by any means whatsoever.

The tax base includes all amounts charged for the following:

(a) Base price of vehicle, watercraft or outboard motor.

(b) Accessories (floor mats, mud flaps, air conditioning, cruise control, radio, CD player, etc.).

(c) Freight or transportation charges from the manufacturer to the dealer.

(d) National advertising that may be charged on a unit basis.

(e) Service and handling prior to delivery (preparation charge).

(f) Documentary fees (does not include separately stated title and registration fees or fees associated with the documentation of a watercraft with the U.S. Coast Guard).

(g) Undercoating.

(h) Extended warranty, service or maintenance contracts sold with the vehicle, i.e., as part of the vehicle purchase agreement. (Note: Extended warranties, service or maintenance agreements sold  subsequent to the vehicle’s purchase are subject to sales tax, but tax is paid directly to the vendor of the contract, not through the clerks of courts.)

(i) Delivery charges from the dealer to the customer effective Aug. 2003.

**** Special Notes ****

Manufacturer’s rebates and cash down payments do not reduce the “price” for calculating sales or use tax.  However, “price” is reduced by any cash discount not reimbursed by a third party given at the time of sale.

The 12 percent federal excise tax (FET) levied by the federal government on the purchaser of a heavy truck is not included in the “price” since it is a federal tax on the consumer.

What is included in the "price" of a motor vehicle when calculating the sales and use tax?

“Consideration” or “price” means the aggregate value in money of anything paid or promised to be paid or delivered in exchange for the transfer of either title to or possession of a motor vehicle, all-purpose vehicle, off-highway motorcycle, watercraft, outboard motor or personal watercraft.  “Price” includes manufacturer’s rebates.

A trade-in allowance reduces the price only if you are purchasing a:

    1.  New motor vehicle, all-purpose vehicle or off-highway motorcycle; OR

    2.  New or used watercraft, outboard motor or personal watercraft from an Ohio licensed watercraft dealer. 

The sales or use tax is computed upon the total amount of consideration, whether in cash, by exchange (trade) or by any means whatsoever.

The tax base includes all amounts charged for the following:

(a) Base price of vehicle, watercraft or outboard motor.

(b) Accessories (floor mats, mud flaps, air conditioning, cruise control, radio, CD player, etc.).

(c) Freight or transportation charges from the manufacturer to the dealer.

(d) National advertising that may be charged on a unit basis.

(e) Service and handling prior to delivery (preparation charge).

(f) Documentary fees (does not include separately stated title and registration fees or fees associated with the documentation of a watercraft with the U.S. Coast Guard).

(g) Undercoating.

(h) Extended warranty, service or maintenance contracts sold with the vehicle, i.e., as part of the vehicle purchase agreement. (Note: Extended warranties, service or maintenance agreements sold  subsequent to the vehicle’s purchase are subject to sales tax, but tax is paid directly to the vendor of the contract, not through the clerks of courts.)

(i) Delivery charges from the dealer to the customer effective Aug. 2003.

**** Special Notes ****

Manufacturer’s rebates and cash down payments do not reduce the “price” for calculating sales or use tax.  However, “price” is reduced by any cash discount not reimbursed by a third party given at the time of sale.

The 12 percent federal excise tax (FET) levied by the federal government on the purchaser of a heavy truck is not included in the “price” since it is a federal tax on the consumer.

What is included in the "price" of a motor vehicle when calculating the sales and use tax?

“Consideration” or “price” means the aggregate value in money of anything paid or promised to be paid or delivered in exchange for the transfer of either title to or possession of a motor vehicle, all-purpose vehicle, off-highway motorcycle, watercraft, outboard motor or personal watercraft.  “Price” includes manufacturer’s rebates.

A trade-in allowance reduces the price only if you are purchasing a:

    1.  New motor vehicle, all-purpose vehicle or off-highway motorcycle; OR

    2.  New or used watercraft, outboard motor or personal watercraft from an Ohio licensed watercraft dealer. 

The sales or use tax is computed upon the total amount of consideration, whether in cash, by exchange (trade) or by any means whatsoever.

The tax base includes all amounts charged for the following:

(a) Base price of vehicle, watercraft or outboard motor.

(b) Accessories (floor mats, mud flaps, air conditioning, cruise control, radio, CD player, etc.).

(c) Freight or transportation charges from the manufacturer to the dealer.

(d) National advertising that may be charged on a unit basis.

(e) Service and handling prior to delivery (preparation charge).

(f) Documentary fees (does not include separately stated title and registration fees or fees associated with the documentation of a watercraft with the U.S. Coast Guard).

(g) Undercoating.

(h) Extended warranty, service or maintenance contracts sold with the vehicle, i.e., as part of the vehicle purchase agreement. (Note: Extended warranties, service or maintenance agreements sold  subsequent to the vehicle’s purchase are subject to sales tax, but tax is paid directly to the vendor of the contract, not through the clerks of courts.)

(i) Delivery charges from the dealer to the customer effective Aug. 2003.

**** Special Notes ****

Manufacturer’s rebates and cash down payments do not reduce the “price” for calculating sales or use tax.  However, “price” is reduced by any cash discount not reimbursed by a third party given at the time of sale.

The 12 percent federal excise tax (FET) levied by the federal government on the purchaser of a heavy truck is not included in the “price” since it is a federal tax on the consumer.

What is included in the "price" of a motor vehicle when calculating the sales and use tax?

“Consideration” or “price” means the aggregate value in money of anything paid or promised to be paid or delivered in exchange for the transfer of either title to or possession of a motor vehicle, all-purpose vehicle, off-highway motorcycle, watercraft, outboard motor or personal watercraft.  “Price” includes manufacturer’s rebates.

A trade-in allowance reduces the price only if you are purchasing a:

    1.  New motor vehicle, all-purpose vehicle or off-highway motorcycle; OR

    2.  New or used watercraft, outboard motor or personal watercraft from an Ohio licensed watercraft dealer. 

The sales or use tax is computed upon the total amount of consideration, whether in cash, by exchange (trade) or by any means whatsoever.

The tax base includes all amounts charged for the following:

(a) Base price of vehicle, watercraft or outboard motor.

(b) Accessories (floor mats, mud flaps, air conditioning, cruise control, radio, CD player, etc.).

(c) Freight or transportation charges from the manufacturer to the dealer.

(d) National advertising that may be charged on a unit basis.

(e) Service and handling prior to delivery (preparation charge).

(f) Documentary fees (does not include separately stated title and registration fees or fees associated with the documentation of a watercraft with the U.S. Coast Guard).

(g) Undercoating.

(h) Extended warranty, service or maintenance contracts sold with the vehicle, i.e., as part of the vehicle purchase agreement. (Note: Extended warranties, service or maintenance agreements sold  subsequent to the vehicle’s purchase are subject to sales tax, but tax is paid directly to the vendor of the contract, not through the clerks of courts.)

(i) Delivery charges from the dealer to the customer effective Aug. 2003.

**** Special Notes ****

Manufacturer’s rebates and cash down payments do not reduce the “price” for calculating sales or use tax.  However, “price” is reduced by any cash discount not reimbursed by a third party given at the time of sale.

The 12 percent federal excise tax (FET) levied by the federal government on the purchaser of a heavy truck is not included in the “price” since it is a federal tax on the consumer.