Here is the basic breakdown of the changes:
- Old Model
- If you bought your car from a dealership, then you have to pay sales tax in the county you purchased it. Additionally, you must pay an ad valorem tax to the state each year on your birthday, the price of which is determined by the value of the car.
- If you purchased your car from a private party, you do not have to pay sales tax. However, you still have to pay the ad valorem tax on your birthday.
- Sales on or after March 1, 2013: There will no longer be a sales tax or ad valorem tax for cars purchased, whether they are from a dealer or private party. Instead there will be a onetime title fee. The fee for 2013 will be 6.5%, in 2014 it goes to 6.75% and in 2015 it goes to 7%. Thereafter it is variable and may go as high as 9%.
- Sales in 2012, up to March 1, 2013
- You may opt into the new title fee process between March 1 and Dec. 31, 2013. The sales tax and ad valorem tax you already paid toward your car will count toward the title fee. If there is a difference, you must pay it. You will not receive money back however.
The new tax is called the Title Ad Valorem Tax (TAVT). The application for title and the TAVT payment must be submitted to the county in which the purchaser registers the vehicle, and the tax must be paid at the time of application for title and registration.
If you purchased your car from a private seller in 2012, and therefore did not pay sales tax, you may want to consider continuing to pay the annual ad valorem tax. Fair market value will be assessed and sales tax applied if you decide to opt into the new system. Depending on how long you plan on owning the car (and how many years of ad valorem tax you will have to pay) it may be cheaper to pay the annual fee.
While direct sales between private sellers will now have to pay sales tax on their vehicle, there are exemptions. Veterans who would be exempt from ad valorem tax will also be exempt from TAVT. Immediate family members (one’s spouse, parent, child sibling, grandparent, or grandchild) will be partially exempt, but only if the seller had paid the TAVT. Instead, they will pay TAVT rate of 0.5% of the fair market value of the vehicle. If the seller was paying annual ad valorem tax on the vehicle, the new owner may either continue paying the annual ad valorem, or pay the TAVT at the time of transfer based on the current fair market value of the vehicle.
New Residents of Georgia after March 1, 2013, will have to pay 50% of the TAVT within 30 days of moving, and the remaining 50% must be paid within the next 12 months. In regard to leases, the leasing company will have to pay the TAVT and the lessee will be subject to sales tax.
Vehicles that do not meet the statutory definition of a motor vehicle, such as trailers and pull-behind campers, will continue to pay the annual ad valorem tax. If a vehicle is salvaged or donated to a non-profit organization, the TAVT rate is 1% of the fair market value of the vehicle.
Even if you do register your vehicle under the TAVT, you will still have to annually register your vehicle in your home county and pay the $20 renewal fee. The existing $18 title fee also still applies. Emissions tests will also continue to be required in applicable counties.
Generally, TAVT payment and application for title must be received by the county with ten days of the date of purchase or penalties and late fees will apply.
Georgia Department of Revenue, Title Ad Valorem Tax Calculator: http://onlinemvd.dor.ga.gov/Tap/welcome.aspx
Georgia HB 386: http://www.legis.ga.gov/Legislation/20112012/126282.pdf