Vehicle Taxability & Exemptions

Taxability & Exemptions of Motor Vehicles

All sales of motor vehicle are subject to sales or use tax unless an exemption applies.  The tax rate charged is based on the county of the purchaser’s residence.  While  other items may be exempted as a casual sale, the resale of a used motor vehicle is not eligible for this exemption.  

Did you receive a notice from us? 

The definition of a Casual Sale is found in R.C. 5739.01(L).

The application of Sales and Use tax to a casual sale can be referenced in R.C. 5739.02(B)(8)

What is an exemption?

An exemption is a statutory reason that a retail sale is not subject to  sales or use tax. This page discusses exemptions that may apply to motor vehicle transfers.

 

A few examples of exemptions for motor vehicles:

Direct FarmingFarming –Motor vehicles  used primarily in the production of agricultural products for sale may be exempt under R.C. 5739.02(B)(17)

Transportation for Hire – Motor vehicles used primarily in transporting tangible personal property for others may be exempt under R.C. 5739.02(B)(32)

Nonprofit Organizations & Churches – Purchases of motor vehicles by nonprofit charitable organizations and churches may be exempt if the vehicle is purchased by and titled in the name of the organization.  R.C. 5739.02(B)(12)

Transportation Services and Public Utilities  – Vehicles   primarily used to provide taxable transportation services,  such as taxicabs or charter services.  Note—the purchaser  is required to have a vendor’s license and remit sales tax on its taxable transportation services.  R.C. 5739.02(B)(41)

What other vehicle purchases are exempt from the sales and use tax?

Find the answer on our Exemptions Definitions page.

 

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.

  

Can you provide some examples of "consideration" other than money that is given in exchange for a certificate of title?

Examples include, but are not limited to the following:

(A) An item of tangible personal property; such as another vehicle, a boat, a horse, etc., given in exchange. The fair market value of the tangible personal property exchanged is the amount of consideration. If there is an even trade of motor vehicles between two individuals with no money exchanged, each individual must pay tax based on the fair market value of the motor vehicle.

(B) Real property, such as a lot, that is given in exchange. In this instance, the fair market value of the real property is the amount of consideration and tax must be paid on that amount.

(C) Shares of corporate stock, whether transferred to or from a corporation in exchange for a motor vehicle. For example, the transfer of a motor vehicle from an individual to a corporation of which the individual is sole owner or a stockholder constitutes a sale and the fair market value of the stock given in exchange is the tax base. If there is no established market value for the stock or securities, it is presumed that the stock’s value is equal to the fair market value of the vehicle or the value of the vehicle on the corporate books.

(D) Cancellation of debt owed to the purchaser or new titleholder.

(E) The transfer of a motor vehicle resulting from the assumption, by the transferee (new titleholder), of a mortgage through a “transfer of equity or interest agreement” wherein the transferor (previous titleholder) is relieved of its original principal liability and becomes a guarantor is a transfer for consideration and subject to tax. The tax base is the total amount of the mortgage assumed plus any other consideration given.

(F) The transfer of a motor vehicle as the result of the transferee (new titleholder) paying off the mortgage in the name of the transferor (previous titleholder) is a transfer for consideration. The tax base is the amount of the pay off plus any other consideration given either in trade or money.

Can you provide some examples of "consideration" other than money that is given in exchange for a certificate of title?

Examples include, but are not limited to the following:

(A) An item of tangible personal property; such as another vehicle, a boat, a horse, etc., given in exchange. The fair market value of the tangible personal property exchanged is the amount of consideration. If there is an even trade of motor vehicles between two individuals with no money exchanged, each individual must pay tax based on the fair market value of the motor vehicle.

(B) Real property, such as a lot, that is given in exchange. In this instance, the fair market value of the real property is the amount of consideration and tax must be paid on that amount.

(C) Shares of corporate stock, whether transferred to or from a corporation in exchange for a motor vehicle. For example, the transfer of a motor vehicle from an individual to a corporation of which the individual is sole owner or a stockholder constitutes a sale and the fair market value of the stock given in exchange is the tax base. If there is no established market value for the stock or securities, it is presumed that the stock’s value is equal to the fair market value of the vehicle or the value of the vehicle on the corporate books.

(D) Cancellation of debt owed to the purchaser or new titleholder.

(E) The transfer of a motor vehicle resulting from the assumption, by the transferee (new titleholder), of a mortgage through a “transfer of equity or interest agreement” wherein the transferor (previous titleholder) is relieved of its original principal liability and becomes a guarantor is a transfer for consideration and subject to tax. The tax base is the total amount of the mortgage assumed plus any other consideration given.

(F) The transfer of a motor vehicle as the result of the transferee (new titleholder) paying off the mortgage in the name of the transferor (previous titleholder) is a transfer for consideration. The tax base is the amount of the pay off plus any other consideration given either in trade or money.

Can you provide some examples of "consideration" other than money that is given in exchange for a certificate of title?

Examples include, but are not limited to the following:

(A) An item of tangible personal property; such as another vehicle, a boat, a horse, etc., given in exchange. The fair market value of the tangible personal property exchanged is the amount of consideration. If there is an even trade of motor vehicles between two individuals with no money exchanged, each individual must pay tax based on the fair market value of the motor vehicle.

(B) Real property, such as a lot, that is given in exchange. In this instance, the fair market value of the real property is the amount of consideration and tax must be paid on that amount.

(C) Shares of corporate stock, whether transferred to or from a corporation in exchange for a motor vehicle. For example, the transfer of a motor vehicle from an individual to a corporation of which the individual is sole owner or a stockholder constitutes a sale and the fair market value of the stock given in exchange is the tax base. If there is no established market value for the stock or securities, it is presumed that the stock’s value is equal to the fair market value of the vehicle or the value of the vehicle on the corporate books.

(D) Cancellation of debt owed to the purchaser or new titleholder.

(E) The transfer of a motor vehicle resulting from the assumption, by the transferee (new titleholder), of a mortgage through a “transfer of equity or interest agreement” wherein the transferor (previous titleholder) is relieved of its original principal liability and becomes a guarantor is a transfer for consideration and subject to tax. The tax base is the total amount of the mortgage assumed plus any other consideration given.

(F) The transfer of a motor vehicle as the result of the transferee (new titleholder) paying off the mortgage in the name of the transferor (previous titleholder) is a transfer for consideration. The tax base is the amount of the pay off plus any other consideration given either in trade or money.

Can you provide some examples of "consideration" other than money that is given in exchange for a certificate of title?

Examples include, but are not limited to the following:

(A) An item of tangible personal property; such as another vehicle, a boat, a horse, etc., given in exchange. The fair market value of the tangible personal property exchanged is the amount of consideration. If there is an even trade of motor vehicles between two individuals with no money exchanged, each individual must pay tax based on the fair market value of the motor vehicle.

(B) Real property, such as a lot, that is given in exchange. In this instance, the fair market value of the real property is the amount of consideration and tax must be paid on that amount.

(C) Shares of corporate stock, whether transferred to or from a corporation in exchange for a motor vehicle. For example, the transfer of a motor vehicle from an individual to a corporation of which the individual is sole owner or a stockholder constitutes a sale and the fair market value of the stock given in exchange is the tax base. If there is no established market value for the stock or securities, it is presumed that the stock’s value is equal to the fair market value of the vehicle or the value of the vehicle on the corporate books.

(D) Cancellation of debt owed to the purchaser or new titleholder.

(E) The transfer of a motor vehicle resulting from the assumption, by the transferee (new titleholder), of a mortgage through a “transfer of equity or interest agreement” wherein the transferor (previous titleholder) is relieved of its original principal liability and becomes a guarantor is a transfer for consideration and subject to tax. The tax base is the total amount of the mortgage assumed plus any other consideration given.

(F) The transfer of a motor vehicle as the result of the transferee (new titleholder) paying off the mortgage in the name of the transferor (previous titleholder) is a transfer for consideration. The tax base is the amount of the pay off plus any other consideration given either in trade or money.