You may not have given much thought about moving your car to another state if you have two residences or about taking it with you when you move, but there are some considerations you should know about. If you’re planning to move soon and purchase a car, you should consider the tax consequences as well as other issues.
Some lessors, particularly smaller local companies, prohibit lessees from permanently moving the leased vehicle to another state and most lessors prohibit taking the car out of the country for more than 30 days. For people who purchase their vehicle, finance agreements rarely restrict permanently moving the vehicle out of state, but usually prohibit taking the vehicle out of the country for more than 30 days.
If you have a leased car and have the right to move your car out of state, be sure to notify the lessor that you have moved and be sure that your car is properly titled and registered in the new state. If you have a loan on your car, you should do the same.
Some states have a sales tax and some states tax cars with a personal property tax. Additionally, the taxes may be collected at different times, depending upon the state.
Some states collect taxes at the beginning of the lease, and other states collect these taxes during the term of the lease. If you move from a state that collects all the sales taxes at the beginning of the lease to a state that collects sales or use taxes during the course of the lease, you must pay additional sales or use taxes on the vehicle in the second state. You usually will not get a credit for paying the taxes in the first state.
When you purchase a car, some states such as New York will charge sales tax at the time of the sale. Other states require payment of a personal property tax, also called an ad valorem tax, on cars in the state. You may find after you pay sales tax when you buy your car, that you will also have to pay personal property tax on the same vehicle when you move it to a another state. Some states charge a personal property tax on your car every year.
SHOULD I INSURE MY CAR IN ANOTHER STATE? You should never tell your insurer that you live in another state (if you don’t) and insure your car in that state to obtain lower insurance premiums. At the time of a claim your insurer will look for clues that your car was really garaged somewhere else and your insurer may deny coverage for your claim, whether it is for a stolen car, property damage to your car or another car, or personal injury. If it is suspected, they may use an investigator and depending upon various factors, you may be simply charged for the premium you didn’t pay or even worse, your claim could be denied.