According to the Virginia Department of Motor Vehicles, the state's title transfer tax is 4.15%, and based on either the vehicle's gross sales price or $75, whichever is greater.
Thus it is a tax that can be deducted, because it is based on the value of the vehicle, and not on some other factor.
The legal reasoning is as
follows. The IRS only allows that portion of a state registration or title fee
that is based on the value of the vehicle to be included toward your
other itemized deductions. Any portion determined by other factors doesn't count. This
is why there are some 20+ states whose residents can potentially benefit from
the deduction; but the remainder cannot: their states do not charge
vehicle registration fees by value, and instead charge flat fees only.
Rather than enter this item as a vehicle registration fee, however, you can instead enter it as a sales tax cost of the car, which is separately added to the rest of your sales
taxes paid, in order to calculate your allowable sales tax deduction.
You would find this section,
in TurboTax, among the Deductions & Credits portion of the interview.
Please see the attached screen-capture image for an illustration. You can
also type the words "sales tax car" into the Find / Search
box on your TurboTax screen, and then click the Jump To link that should
appear beneath -- that will take you to the appropriate TurboTax page
Finally, it is also important
to keep in mind that you (or anyone claiming this deduction) may or may not
actually see any net tax benefit from including these items on your tax
return. The reason for this is that you must have enough itemized
deductions (in total) to exceed the standard deduction available to all
taxpayers. Since more than 2 in 3 taxpayers do not, most people end up
taking the (more valuable) standard deduction, rather than itemizing
deductions. If you input all your data carefully, however, the TurboTax
software will make that determination for you.
Thank you for asking this question.
