January 04, 2017

Will I have to pay taxes in two states if I purchase a car in TN for a GA resident?

Dear Consumer Ed:

I live in Tennessee and my daughter is a Georgia resident.  If we buy a used car from a dealer in Tennessee for my daughter to use in Georgia, will we have to pay taxes in both states?

Consumer Ed says:

For the answer to this question, we went to the Motor Vehicle Division of the Georgia Department of Revenue.

If, within three days of the purchase, you either take the car to Georgia or have the dealership deliver it to Georgia for you, you will not have to pay a sales tax in Tennessee.  Instead, you and the Tennessee dealer must execute either a 3-Day Affidavit or a Certificate of Interstate Delivery.  These documents are completed and signed by both the purchaser and the dealer to affirm that the vehicle is being purchased for removal from the state. 

Within 30 days of the date of purchase, the vehicle must be titled and registered in your daughter’s county of residence.  At that time, a one-time Title Ad Valorem Tax (“TAVT”) must be paid based on the value of the vehicle.  (You can determine the TAVT amount at the following link: eservices.drives.ga.gov.)  

If, instead, you intend to take delivery and keep the vehicle in Tennessee beyond the three-day-period, you must pay the appropriate Tennessee sales tax and register the vehicle in Tennessee.  Your daughter will then have to pay TAVT when she titles the vehicle in Georgia.

To avoid paying taxes to both Tennessee and Georgia, you should work with the dealer to apply for a Georgia certificate of title in your daughter’s name at the time of purchase.  The dealership will be able to assist you with executing the appropriate sales tax exemption certificate for the State of Tennessee and with filing all necessary paperwork with the appropriate Georgia county tag office.  If you are financing all or part of the purchase, it is advisable to contact your lender first to confirm how it is listing the owners on the title. Specifically, the lender may want you, as the borrower, listed as the first owner and your daughter listed as the second owner.

Motor vehicle insurance and a temporary operating permit will be required to operate the vehicle legally in Georgia.  A temporary operating permit, if not issued by the Tennessee dealership, can be obtained by your daughter from the county tag office in Georgia.

For more information about the TAVT, visit the Motor Vehicle section of the Georgia Department of Revenue website at dor.georgia.gov/motor-vehicles/vehicle-taxes-title-ad-valorem-tax-tavt-and-annual-ad-valorem-tax.

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