The sales and use tax rate for motor vehicles in Virginia is set to increase on July 1, 2013. Vehicles purchased prior to that date are subject to the current sales and use tax rate of 3%. Vehicles purchased on or after July 1, 2013, will be subject to a sales and use tax rate of 4%.
This seems straightforward, but even the most simple matters can be complicated once sales and use tax gets involved. Sure enough, the Attorney General of Virginia was asked to clarify which tax rate applies when a vehicle is purchased prior to July 1 but titled by the Virginia Department of Motor Vehicles on or after July 1.
According to the Attorney General:
“[T]he proper tax rate to impose on a vehicle sale transaction in Virginia is the tax rate in effect at the time of the sales, when ownership or possession of the vehicle is transferred, whichever of these events of sale occurs first.”
In other words, if the sales transaction takes place prior to July 1, 2013, the rate of tax imposed should be 3%. This holds true even if the Department of Motor Vehicles titles the vehicle on or after July 1, 2013.
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