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Level 1

I bought a new car. can i claim the taxes from this as personal property tax

I purchased the car in February 2013. Under personal property deductions, can I claim the state tax paid on this car?
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Accepted Solutions
bwa
Level 1

I bought a new car. can i claim the taxes from this as personal property tax

Generally, the tax paid on purchase is a sales tax and may be deductible under some circumstances.  You can deduct sales tax on a new or used purchased or leased vehicle or boat but, if you live in a state with a state income tax, it probably isn't to your advantage to do so.  To claim sales taxes on a vehicle or boat you need to meet two criteria.  You must itemize deductions, and your sales tax deduction, including the sales tax on the vehicle must exceed your state income tax.

Realistically, in most states with a state income tax, the state income taxes would be higher than the state sales taxes, even with sales tax on a car added.

If you claim the standard deduction, you cannot deduct sales taxes.

The deduction for sales tax is under the deductions and credits tab.  Go to:
Deductions and Credits

  • Estimates and Other Taxes Paid
  • Sales Tax.
  • Click Update next to Sales Tax.
  • Click Continue.
  • Select Easy Guide
  • Click Edit next to your sales tax rate.
  • Click Continue twice and you will then be on the page where you enter your car or other major purchases.

Note:  for an auto, the tax rate doesn't need to be the same as the general tax rate.  For a boat, it does.

A personal property tax is an annual tax based on the car's value.  It might be paid on purchase, or (as in South Carolina) it may be billed annually by your county.
4 Replies
bwa
Level 1

I bought a new car. can i claim the taxes from this as personal property tax

Generally, the tax paid on purchase is a sales tax and may be deductible under some circumstances.  You can deduct sales tax on a new or used purchased or leased vehicle or boat but, if you live in a state with a state income tax, it probably isn't to your advantage to do so.  To claim sales taxes on a vehicle or boat you need to meet two criteria.  You must itemize deductions, and your sales tax deduction, including the sales tax on the vehicle must exceed your state income tax.

Realistically, in most states with a state income tax, the state income taxes would be higher than the state sales taxes, even with sales tax on a car added.

If you claim the standard deduction, you cannot deduct sales taxes.

The deduction for sales tax is under the deductions and credits tab.  Go to:
Deductions and Credits

  • Estimates and Other Taxes Paid
  • Sales Tax.
  • Click Update next to Sales Tax.
  • Click Continue.
  • Select Easy Guide
  • Click Edit next to your sales tax rate.
  • Click Continue twice and you will then be on the page where you enter your car or other major purchases.

Note:  for an auto, the tax rate doesn't need to be the same as the general tax rate.  For a boat, it does.

A personal property tax is an annual tax based on the car's value.  It might be paid on purchase, or (as in South Carolina) it may be billed annually by your county.
Level 8

I bought a new car. can i claim the taxes from this as personal property tax

Yes - if tax is based on value of car, and at general sales tax rate for initial sale. (Not all States tax thusly) ...

The initial sales tax paid would be deductible only if you deducted State sales taxes instead of income tax withheld on your itemized return (not actually as Personal Property Tax). PPT would be the annual license fee portion based on vehicle value - and not all States have such fees. For info, see http://www.dmv.org/registration-renewal.php 

Level 1

I bought a new car. can i claim the taxes from this as personal property tax

Sales tax on major purchases (such as a car, boat, RV) are deductible for those who itemized their deductions. However, you can only deduct Sales tax OR State and local income taxes - not both. So, you need to determine which is most. 

Additionally - the DMV fees you paid on your car (in excess of what is considered "registration") are also deductible if you itemize your deductions.  

No - the interest you pay on your auto loan is not deductible. Sorry...

Level 2

I bought a new car. can i claim the taxes from this as personal property tax

You should reword your first sentence. It could get a lot of people in trouble. There's a big IF involved. "DMV fees" is the key term. I'm filing income taxes therefore I can claim the motor vehicle tax AND motor vehicle fee on my federal return, NOT sales tax. Some people are under the impression it's OK to claim the vehicle sales tax when filing an income tax return but this isn't so. I'm in Nebraska & here's the rule in my state:

 http://www.revenue.nebraska.gov/tax/current/2018_indiv_bklt/Itemized_deduct.html