Used Car Tax Changes Coming to BC in 2022
Get ready because used car tax changes are coming to BC in 2022. For as long as anyone can remember, buying a used car from a private seller or dealer was a pretty simple procedure. You spend some time sourcing out the type of vehicle you want to buy, you test drive it, you decide on it, you haggle over the price a bit, and then you make a deal. After all that, you fill out the transfer papers with the seller and on them you state the price of the vehicle you are buying. If you were making a used vehicle purchase from a private seller, the PST you’d have to pay would range between 12% and 20%, depending on the price of the vehicle. If it was under $125,000, the PST would be 12%. If it was between $125,000 – $150,000, the PST would be 15%. Any used vehicle purchase over $150,000 from a private seller would cost you 20% in provincial sales tax, IF you listed it with the price that you actually paid. Many people didn’t.
Used Car Buying in the Lower Mainland is Set to Change This Fall
To give you an example, if a used car was listed for $17,000, but only sold for $15,000, the PST would on it would be $1050.00. However, if the government feels that the vehicle really is worth $17,000, and should not have been sold for $15,000, the buyer will still need to pay the PST amount that would have been on the original price. That means, you may buy the vehicle for $15,000, but you still pay the PST as if you paid $17,000. So, instead of paying only $1050.00 in provincial sales tax, you’ll pay $1190.00. That’s a difference of $140.00.
In an effort to reduce shelling out more money on a used vehicle purchase, many people would record a much lower price on the transfer papers than what they actually paid. Private sellers typically didn’t care because they got the price they wanted when they were selling a vehicle, and were just happy to have someone take it off their hands. However, the province of British Columbia is making some drastic changes to the PST that consumers pay on used vehicles, in an effort to prevent fraud. This will make buying and selling a used vehicle in BC look a little different this fall, as the change is scheduled to take place in October 2022.
Buying a Used Car from a Dealership
Often times people choose to buy a used car from a private seller that they’ve found online through sites like Craigslist, Facebook Marketplace, Kijiji, or Auto Trader. This is because they assume that the price that they pay will be considerably less than if they were to buy a used vehicle from a dealership or a professional used car buying company like Cash For Cars BC. That’s where they would be wrong.
Just like any other vehicle purchase, when you bought a used car or truck from a dealership, your vehicle purchase was subject to PST. However, the scale for the tax you’d pay on buying a used vehicle direct from a dealership looked a lot different than it did if you were buying it from a private seller.
Here is the PST breakdown when you bought a used vehicle from a dealership:
- Less than $55,000: 7%
- $55,000 to $55,999.99: 8%
- $56,000 to $56,999.99: 9%
- $57,000 to $124,999.99: 10%
- $125,000 to $149,999.99: 15%
- $150,000 and over: 20%
Furthermore, if you were trading in an older vehicle to help reduce the cost of the new one, even though the new one you were buying was still technically used, the PST would apply to the cost of the vehicle BEFORE any trade-in or down payment was applied. So, while you may have been reducing your price by trading in another vehicle, the PST you paid was still based on the overall price of the car, not what you actually paid for it.
How Buying a Used Car is Changing in British Columbia
Starting October 1st, 2022, used car shopping could become a lot more expensive because that’s when the province will be changing the way that used vehicle purchases are taxed. Instead of selecting a car, then deciding on a price mutually with the seller, and then recording the price that you’ve paid onto the transfer forms to calculate the tax, the government has new plans to be the ones to decide the value of the vehicle you’re buying. So, instead of the province deciding how much PST you pay based on the information you and the seller have given, the government will now be the ones to determine the value of the vehicle. If you want to challenge that, you’ll have to have a mechanic do a vehicle appraisal or inspection to justify why the price is less than what the government feels it should be.
The province of British Columbia is doing this to try to reduce fraud, as many people are selling vehicles for far less than what they should really be worth. When a vehicle is sold for less, or claimed to be sold for less than it is valued at, the government is losing out on tax dollars that are used for things like medical care, road upgrades, etc, which is why they are imposing these new regulations. But in a province that is already less than affordable these days, many people don’t have the extra money to shell out for additional taxes, especially when they are buying used, not new.
Check Out Our Used Car Buying Checklist Before You Buy!
When you’re shopping for a used vehicle, it’s easy to get overwhelmed with all the small details. Especially, when you’re shopping on a budget, and don’t have a clear picture in your mind of what you really want. It’s okay to be undecided on the type of vehicle you want to buy, but whatever you choose, be sure to give it a good inspection before you hand over the cash.
Here is our Used Car Checklist to help make things a bit easier when you’re going to look at a used car, truck, SUV, or minivan.
- Exterior – Before buying any used vehicle, be sure to check the body of the car thoroughly. Check for dents, dings, cracks, rust, paint chips, scratches, or any sign of leaks. This will help determine if the vehicle has been in an accident, is being sold because of leaking, and how it was driven (with or without much care).
- Interior – Just like you would with the exterior, give the inside of the vehicle a solid look over. You want to check for mold, mildew, leaks, stains. Check the headliner for stains, water spots, or damage, and check the back of the vehicle by the rear window for the same things. Look for any loose or exposed wires, as this can indicate a concealed electrical issue, which could be the reason the seller is trying to make a deal on their car.
- Electrical Systems – This is a pretty important thing to check, but many of us forget to. Check to make sure that if the vehicle has power windows, power seats, power controls for anything really, that they are all working without issue. Check to make sure that the sun roof opens and closes properly, and that the dash lights are in good working order, as well as the stereo and any other features like Bluetooth connect, etc.
- Heating & Cooling Systems – There’s nothing worse than buying a used car, only to find out that the A/C needs to be recharged, or the defrost doesn’t actually defrost anything. Be sure to check that the vents are all in working order; they open and close. Turn on each heating and cooling setting and test each one from high to low to make sure the blower is doing what it should.
- Tires – It may seem like it’s not that important, but making sure the tires are in good condition definitely matters. Not only do you not want to have to replace a full set of tires after shelling out a wad of cash for a vehicle, you don’t want to have a tire blow while you’re driving down a busy roadway, or worse, out in a rural area. Check to make sure the tires have good tread left on them, that there aren’t scrape marks along them from hitting the curbs repeatedly, and that they are properly inflated.
- Engine & Brakes – It goes without saying that if you’re buying a used car, you’re going to want to test drive it before you sign those transfer papers. When you take it out for that first spin, be sure to listen for any unusual engine noise, and to listen for brake squealing or grinding. Brake jobs can be pricey, so make sure you’re not going to need one right after buying the vehicle by being diligent with your test drive.
Whenever you’re buying any kind of used vehicle, take the time to check over everything inside and out, even if you’re buying it from a dealership. Dealerships don’t invest much money into used cars, so you really don’t know what you could be getting unless you put in the work to inspect it properly before you buy. And if you happen to be in the market to sell a used car, talk to our helpful used car buyers to find out what we’ll pay you for it, before you ever go to a dealership. We always pay the most cash for cars in Metro Vancouver and the Fraser Valley!
Buying or Selling a Used Vehicle? Think Cash For Cars BC Instead!
Dealerships are notorious for over charging on vehicles, even used ones. They have a high overhead, their salesmen work on commission, and they don’t make as much money on selling used vehicles as they would on a new one that they can have a customer finance.
Cash For Cars BC is different. We have virtually no overhead, our main focus is buying used vehicles, not just selling them, and NOBODY pays more cash for cars than we do in Metro Vancouver.
If you’re thinking about selling a used car, truck, SUV, or van, think about using our professional used car buying service. We are the leaders in the used car buying business, and have been the Lower Mainland’s favourite used car buyer since 1998. We work 7 days a week, days and evenings, and unlike most other used car buyers, WE COME TO YOU! Contact one of our friendly used car buyers today to find out just how much cash you can get paid for your car!