# Tax on a car. I am not sure what the deal is here.



## Jay3 (Jul 16, 2013)

I loaned money to a friend for a car recently. About 6K.

Had it in writing that I was owed this money. Signed by both parties. And if I didn't get paid back, I would receive car as collateral. 

Friend passed away, car was willed to friends mother. Car is then being signed over to me as per agreement. 

Do I have to pay taxes on this car under this scenario?


----------



## OptsyEagle (Nov 29, 2009)

My guess would be no. It sounds like a simple loan payback to me and the repayment of a loan is not taxable.


----------



## OptsyEagle (Nov 29, 2009)

It sounds like a simple loan payback to me and a loan payback has never been taxable.


----------



## rikk (May 28, 2012)

Jay3 said:


> I loaned money to a friend for a car recently. About 6K. Had it in writing that I was owed this money. Signed by both parties. And if I didn't get paid back, I would receive car as collateral. Friend passed away, car was willed to friends mother. Car is then being signed over to me as per agreement. Do I have to pay taxes on this car under this scenario?


Looks like you agreed to take the car (as collateral), and not the money. In Ontario ... 

"As the new owner, by law you must register your used vehicle within six days of the sale. Here is how:
1.Bring the Used Vehicle Information Package and the vehicle permit with the completed Application for Transfer to a Driver and Vehicle Licence Issuing Office 
2._Pay the retail sales tax_. At the time of the transfer, the Driver and Vehicle Licence Issuing Office collects the tax. _The amount of tax is based on the purchase price or the wholesale value, whichever is greater_ 
3._Pay the licensing / fees for plates and permit _... http://www.mto.gov.on.ca/english/dandv/vehicle/used.shtml ... 

If the above applies, and you don't want the car or don't think it's worth the expense, you might first look into the friends mother selling the car (maybe you can find a buyer) rather than change the ownership into your name ... if the above applies. In Ontario, they'd always get you at the license bureau (it used to be called).


----------



## OptsyEagle (Nov 29, 2009)

Sorry, I was thinking of income taxes. Can't really say about sales taxes, but I suspect you would need to pay them. Your friend bought the car (albeit with your money) and now you have bought the car.


----------

