The New “Title Ad Valorem Tax” — TAVT — In Simple Terms

GA State SealHave you heard about the “drastic” new taxes we must pay to title and register vehicles in Georgia?

Relax.  If you currently have a motor vehicle registered in Georgia, but you bought it before January 1, 2012, this new law does not affect that particular vehicle (unless you sell it).

Most of us will continue paying the same annual ad valorem tax and tag fees on our current vehicles, as we already do in Georgia.

Georgians are familiar with the “ad valorem” tax.  [Ad valorem is a phrase that roughly translated means, “Happy Birthday, Sucker!”]  Every year around our birthdays we pay fees to get our “tags.”  The more valuable the vehicle, the more annual tax we pay for the right to get tags – which we pay for separately.

Here’s the good news:

The next time you buy a vehicle, you will no longer have to pay sales tax on it.

House Bill 386 was passed by the 2012 Georgia General Assembly and changes the method of taxation for motor vehicles, effective March 1, 2013.

Vehicles purchased on or after March 1, 2013 and titled in Georgia will be exempt from sales and use tax and the annual ad valorem tax.  Instead, these vehicles will be subject to a new, one-time title ad valorem tax (TAVT) that is based on the value of the vehicle.

In addition, if you purchase and title a vehicle in Georgia between January 1, 2012 and March 1, 2013, you may be eligible to opt-in to the new title ad valorem tax.

Here’s the bad news:

You will have to pay the title ad valorem tax (TAVT) when you purchase a car – even from a private individual.  Paying the TAVT on private sales is a drastic change, indeed.

If you are hoping to get out of paying the tax by pretending you paid $249.95 for a spiffy 2011 Ferrari 458 Italia, forget it.  Our friends at the tax department – because they love to serve us – determine what used cars are worth.  The value they set takes precedence over your bill of sale, unless you win an appeal with the tax department.  (Good luck on that.)

How Much is the TAVT Rate?

  • From March 1, 2013 until December 31, 2013, the TAVT rate is 6.5%.
  • From January 1, 2014 through December 31, 2014, the TAVT rate is 6.75%.
  • From January 1, 2015 through December 31, 2015, the TAVT rate is 7.0%.
  • In future years the rate may be adjusted, but in no event can the rate exceed 9%.
  • The rate for the subsequent tax years, if increased, will be set by the Revenue Commissioner and published by August 31.

 

The average new car sold in America costs about $30,000.  If you purchase a car for $30,000 – with no trade-in or rebates – you will be charged a TAVT of $1,950 for the right to buy a tag (for an additional charge).

But remember, you won’t have to pay sales tax on the sale.

Just figure on paying an additional $650 TAVT for each $10,000 the car is worth.

  • If your new car has a net sales price of $50,000, plan on paying a TAVT of $3,250.
  • If your used car is valued at $7,500, your TAVT will be $487.50.

 

After you pay the one-time TAVT, you’ll only have to pay these fees to register your vehicle in your home county:

  • $20 annual renewal fee.
  • The existing $18 title application fee still applies when the vehicle is titled.
  • You must continue to maintain liability insurance, as required by Georgia law.
  • If you live in one of the 13 emissions counties, the annual emissions test is still required prior to registration.
  • In addition to the TAVT, if you live in one of the three transportation districts that approved the Transportation Special Purpose Local Option Sales Tax (“T?SPLOST”) referendum in July of 2012, you will also be required to pay up to fifty dollars in sales tax when purchasing a motor vehicle.

 

You may click on the links below for more information or read the Frequently Asked Questions below.

My guess is we’ll be seeing many more new taxes in the years to come, but living in Georgia is worth it.

Click Here for TAVT Frequently Asked Questions

Click Here for TAVT Information

Frequently Asked Questions

How is Fair Market Value Determined?

Vehicles identified in the Georgia Department of Revenue motor vehicle valuation data base have a fair market value calculated by averaging the current wholesale and retail values of the motor vehicle pursuant to O.C.G.A. § 48-5-442.  Accordingly, the fair market value for purposes of the TAVT will generally be the same as the fair market value used in the current ad valorem tax system.

How is TAVT Calculated?

The TAVT calculation is as follows:

  • First, subtract the trade-in value from the “fair market value” of the vehicle.
  • Second, multiply this number times the TAVT rate.

How Much is the TAVT Rate?

  • From March 1, 2013 until December 31, 2013, the TAVT rate is 6.5%.
  • From January 1, 2014 through December 31, 2014, the TAVT rate is 6.75%.
  • From January 1, 2015 through December 31, 2015, the TAVT rate is 7.0%.
  • In future years the rate may be adjusted, but in no event can the rate exceed 9%.
  • The rate for the subsequent tax years, if increased, will be set by the Revenue Commissioner and published by August 31.

Where do I pay the TAVT?

The application for title and TAVT payment must be submitted to the county in which the purchaser registers the vehicle (i.e. county of residence).  The TAVT must be paid at the time application for title and registration are made.

If you purchase your vehicle at a dealership, the dealer will accept the application for title and TAVT payment on your behalf and deliver the title application and TAVT payment to your county tag agent.

As of March 1, 2013, transfer of ownership for titled vehicles must be taken to the county tag agent in the new owner’s county of residence.  The only titles that will be issued from DOR MVD Headquarters are salvage titles, replacement titles, and title corrections.

Can the owner of a vehicle purchased prior to March 1, 2013 avoid payment of future ad valorem taxes?

If the vehicle was purchased in Georgia between January 1, 2012 and March 1 2013 and titled in this state, the owner is eligible to opt in to the new system.  If you qualify to opt in, you will get credit for any sales tax and ad valorem tax previously paid up to the amount of TAVT due.  However, if the sales tax and ad valorem tax previously paid is less than the TAVT due, you will need to make up the difference when you opt in.  This option must be exercised before January 1, 2014.

Can a vehicle be transferred to or inherited by an immediate family member without having to pay the TAVT?

House Bill 386 defines “immediate family member” as one’s spouse, parent, child, sibling, grandparent, or grandchild.

Whether a motor vehicle transferred or inherited by an immediate family member will be subject to the TAVT will depend on whether the former owner had paid TAVT.

If the former owner of the vehicle had not paid TAVT and was paying annual ad valorem tax on the vehicle, the new owner may choose to either:

  • Continue paying annual ad valorem tax on this vehicle, and therefore not be subject to the TAVT OR
  • The new owner may elect at the time of transfer to pay the TAVT based on the current fair market value of the vehicle at the applicable rate for the current year.

If the vehicle is acquired from a family member who paid the TAVT at the time they purchased the vehicle then the new owner’s TAVT rate will be 0.50% (one-half of one percent).  In this case the new owner does not have the option to revert back to the annual ad valorem system.

I will become a new resident of Georgia after March 1, 2013.  How does this affect me?

New residents moving into Georgia are required to pay 50% of the TAVT within 30 days of moving to the state and the remaining 50% must be paid within the next 12 months.

What happens if the TAVT is not remitted to the county tag agent in a timely manner?

If the purchase is made at a dealership, the dealer has 10 days from the date of purchase to remit the title application and TAVT payment to your county tag agent.  If remitted later than 10 days from the date of purchase the dealer is liable for 5% of the TAVT owed plus an additional 5% for each month payment has not been remitted.  A second penalty also applies to dealers if they do not remit the title application and TAVT payment within 30 days of the date of purchase.

For non-dealer sales, i.e. a “casual sale”, the buyer must remit the application for title and the TAVT payment within 30 days of the purchase of the vehicle.  If paid later than 30 days there will be a penalty of 10% of the amount of the TAVT owed plus an additional 1% per month for every month late.

I am a Georgia resident but I plan to buy a car in an adjoining state.  Will I be required to pay the TAVT when I title this vehicle in Georgia?

Yes

Are leased vehicles subject to the TAVT?

Yes, the leasing company will have to pay the TAVT.  The entity or individual leasing the vehicle will be subject to sales tax on the lease payments.

If I pay the TAVT do I still have to register my vehicle every year and pay the $20 renewal fee and other fees?

You are still required to annually register your vehicle in your home county and pay the associated $20 renewal fee.  The existing $18 title application fee still applies when the vehicle is titled.  You must continue to maintain liability insurance as required by Georgia law.  If you live in one of the 13 emissions counties, the annual emissions test is still required prior to registration.

What if I tell the Tax Department that I am not going to pay this tax?

Hahahahaha

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