[Itsagoodday]

I know there was a 'crack down' but it seemed that the true legality of it was not settled. Meaining it would be hard to say that an LLC cant be located in one state and operate in another.

But the big question is, anyone still doing it. I live in NC which is not (as far as I know) one of the states to crack down.

Love to hear what the current wisdom is.

Thanks!

 

[octechnologist]

Depending on how things play out in CA with the recent covid power grab, and nat’l election, etc... I may very well consider moving to Montana.

 

[wrex]

I know there was a 'crack down' but it seemed that the true legality of it was not settled. Meaining it would be hard to say that an LLC cant be located in one state and operate in another.

But the big question is, anyone still doing it. I live in NC which is not (as far as I know) one of the states to crack down.

Love to hear what the current wisdom is.

Thanks!

Can absolutely still be done, with a couple caveats.

1- no lien holder is allowed, meaning you have to pay cash for the car.

2- there is now a luxury tax charged annually for cars over $150 MSRP so depending on duration of ownership, the avoidance of sales tax starts to diminish.

The crack down has happened much more with LLCs that have a name like “firstname lastname, LLC”. I can PM you the name of my contact there to get you set up if you need to, but I haven’t found it to be worth the hassle as much as it used to be.


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[Jason B]

@wrex - that’s what I’m hearing. My previous owner of my G, 3 years ago he did it and had a loan with a bank. He now has a Huracan he got 6 months ago and said things have changed and “Montana for everyone is expensive now, doesn’t matter to do it now and has a higher cost “

Some things did change and what you mentioned may not be as cost saving. Interesting.

 

[monEmakindave]

Advantages definitely have diminished monetary wise as the new tax for cars 10 years new. It’s a luxury tax of any cars over 100k

There still some advantages no state inspections no front plate required if ur state requires.

 

[wrex]

Advantages definitely have diminished monetary wise as the new tax for cars 10 years new. It’s a luxury tax of any cars over 100k

There still some advantages no state inspections no front plate required if ur state requires.

Are you sure it’s $100k? I thought it was $150. I’ll look it up when I get a chance.

Edit: confirmed it is a 1% tax on all vehicles with an MSRP of $150,000 or more, and it diminishes .1% each year until the car is 10 years old, at which point it’s a “lifetime” registration afterward.

 

[octechnologist]

Is that only for cars bought as NEW? Does it also impact the buyer of a 5 year old USED car, for instance?

 

[wrex]

Is that only for cars bought as NEW? Does it also impact the buyer of a 5 year old USED car, for instance?

It affects all cars less than 10 years old with an MSRP of over $150,000, independent of being new or used.

The luxury tax for a 5 year old used car, however, will only have a 0.5% luxury tax off the original MSRP, so a $250k car would be $1,250.


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[robgreg75]

I see a lot of the 400k+ cars in Texas with Montana plates so they are still doing it here.

Depending on how things play out in CA with the recent covid power grab, and nat’l election, etc... I may very well consider moving to Montana.

I went on a vacation to Montana last year and loved it. Lots of Trump signs there too.

 

[trackstar19]

I know there was a 'crack down' but it seemed that the true legality of it was not settled. Meaining it would be hard to say that an LLC cant be located in one state and operate in another.

But the big question is, anyone still doing it. I live in NC which is not (as far as I know) one of the states to crack down.

Love to hear what the current wisdom is.

Thanks!

I still have one of my cars registered under a Montana LLC and haven’t had any issues with local police as of yet (knock on wood). The rules have changed a bit like noted - you essentially have to own the car outright and have the title yourself and the new luxury tax on cars over $150k MSRP. But the no state inspections and being free to modify the car makes it worth it to me personally (we will see if my tune changes if I ever start getting heat for it lol).

 

[RedGTS]

I know there was a 'crack down' but it seemed that the true legality of it was not settled. Meaining it would be hard to say that an LLC cant be located in one state and operate in another.

But the big question is, anyone still doing it. I live in NC which is not (as far as I know) one of the states to crack down.

Love to hear what the current wisdom is.

Thanks!

Of course an LLC can be formed or located in one state and operate in another. The problem is the LLC in this scenario isn’t “operating.” All it does is own an asset, which it purchased with money it didn’t generate. The LLC generates no revenue and conducts no business, and the sole asset in question is located in another state. So these arrangements have always been vulnerable to challenge by tax authorities in the state where the vehicle is located and where the de facto owner resides. Most just haven’t done so until fairly recently.

There is another method of avoiding sales tax that may help some of you though, if your state exempts transfers between close (often called lineal) relatives like parents, children, siblings, etc, and you have such a relative who lives in one of the states that charges a low flat sales tax on vehicles (like SC). In that situation you can have your relative buy the car (you provide the funds), pay the tax ($300 in SC), and then immediately transfer it to you. You then file the appropriate form when you register it stating why the sale from your relative to you is exempt from sales tax and you’re good to go.


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[octechnologist]

method of avoiding sales tax that may help some of you

Presumably only cash buyers? Having a hard time envisioning this with any kind of financing.

Pretty slick though!

 

[RedGTS]

Presumably only cash buyers? Having a hard time envisioning this with any kind of financing.

Pretty slick though!

I’ve only done it with cash. I don’t think there would be a problem getting a loan on the second transaction, from relative to you. The tricky part would be the first transaction. You would almost have to front the cash for them to buy it initially, unless they were willing and able to get a loan in their own name.


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[boatpi]

I have a valid LLC in MT. They added the tax two years ago, so it adds about $750 to the yearly registration. BUT, MT has NO VIN inspection as long as you provide a title signed off in the LLC name, NO sales tax of any kind. this is even on new cars, NO sales tax and MT does not have a tax. So if purchsed new, you must send a biil of sale, and the MSO. Wait about 3 weeks, done deal. Someone buys it from you, just transfer it by signing off the title, or the can transfer in MT, no tax.

 

[Kenny94945]

Post 11 has some merit.

FWIW. Calif is near 10% sales tax when buying new. Then when you buy used you get to pay another near 10% sales tax. (There is no sales tax "netting" trade in vehicle values to reduce sales tax either).
Personally I have never liked that endless sales tax on vehicles.

Transfers between relative is interesting.
Oregon has zero sales tax for example. Calif has it 7500 used vehicle mileage mandate, OEM emission certification sticker, semi-annual smog tests, all those "special" add on fees to registration costs and again sales tax on transfers.

Again interesting. Sadly, I know of no examples. or stories of this idea.

 

[tomdfw1]

Depending on how things play out in CA with the recent covid power grab, and nat’l election, etc... I may very well consider moving to Montana.

Sign me up! Damn liberals are screwing everyone up! They may require taxpayers give homeless people Lamborghinis as part of their capital redistribution BS!

 

[Itsagoodday]

Decided not to do the Montana LLC thing. Although I have to pay a 'sales' tax on the car in NC (actually called a use tax), and yearly property tax that is really the only big savings.

The LLC would require a corporate insurance policy which is MUCH more expensive than insuring the car in my name personally. Had the numbers run this morning and State Farm is giving me 380 every 6 months.

So the corporate policy would be about 3x higher. So even paying yearly property tax, the car will much cheaper to own personally and eventually even out the initial sales tax.

I looked at a few companies that specialize in setting up and maintaining the LLC and registered agent and mail box..etc. So there are some misc yearly fees to the Montana thing.

On a newer car it might be a bigger spread, but cant believe how cheap the insurance is personally. 5 vehicles 2 drivers, no tickets and 300/500 liability w/ and umbrella policy over an above auto limits. I have all my policies w/ state farm so there are a lot of added in discounts. But seems like a bargain!

 

[iownedu]

Be very careful being insured with State Farm, you will get a terrible payout if the car is stolen or totaled.

I use American Modern, guaranteed value agreed upon. Grundy is good also.

 

[Oldschool]

Be very careful being insured with State Farm, you will get a terrible payout if the car is stolen or totaled.

I use American Modern, guaranteed value agreed upon. Grundy is good also.

Decided not to do the Montana LLC thing. Although I have to pay a 'sales' tax on the car in NC (actually called a use tax), and yearly property tax that is really the only big savings.

The LLC would require a corporate insurance policy which is MUCH more expensive than insuring the car in my name personally. Had the numbers run this morning and State Farm is giving me 380 every 6 months.

So the corporate policy would be about 3x higher. So even paying yearly property tax, the car will much cheaper to own personally and eventually even out the initial sales tax.

I looked at a few companies that specialize in setting up and maintaining the LLC and registered agent and mail box..etc. So there are some misc yearly fees to the Montana thing.

On a newer car it might be a bigger spread, but cant believe how cheap the insurance is personally. 5 vehicles 2 drivers, no tickets and 300/500 liability w/ and umbrella policy over an above auto limits. I have all my policies w/ state farm so there are a lot of added in discounts. But seems like a bargain!

If you insure an exotic car with anything but an agreed value policy you are taking a huge risk in the event of at total loss

 

[Itsagoodday]

@iownedu I have been with state farm for 20+ years and been treated fairly. I did however have a run-in with Geico of a person that rear-ended me when I was turning in my driveway and they totaled our family car.

The adjuster was nice enough, but his first offer was low. My State Farm Agent gave me a licensed appraiser and they did a full market analysis which I provided to the adjuster. In the end Geico adjusted their payout. The key is finding similar vehicles for sale and valuations. So the 'market' can always be assessed fairly easily for a car like this. Run a search for 07 Gallardos w/ 14k miles (or whatever) and similar options and there are your data points.

Having pictures that document vehicles condition is a good thing to have also. On our family car, condition was a factor in raising out payout and ACV (actual cash value).

There is an arbitration process if you dont accept the value and I think the Lambo market is 'tight' enough to make pretty clear valuations. Meaning there are not 1000's of data points like there are in other car. Looking up a model year, there may only be 20 examples and those will range from "low miles" to "High" and subsequent values.

In the end, having with my State Farm is a great value with very good liability and personal injury. I learned a good lesson after I got rear ended, is I carry the max un-under insured motorist coverage since my state only requires 25k personal injury. I carry 250/500. If you get hit and hurt very bad, that coverage alone will be worth it.

Again, my liability umbrella policy also pics up and gives me an additional 1,000,000 GL on top of the auto policy if anything ever were to happen.

I will fight the batter for 'value' in the event of a total loss, but to me insurance is more than just covering the cost of the vehicle. Live can change in the blink of an eye.