You pay full tax on the purchase price if you buy from a private individual. If you trade at a dealer, you pay the tax on the difference. If you trade privately, you're supposed to pay tax on the current market value of the vehicle. If you do pay a really low price on something, have it notarized and dmv won't question it. Don't mess around with taxation, their computers are pretty good and they'll catch up with you eventually. I found out, but didn't realize I had made a mistake thanks to the stupid Homestead Rebate.
