Montana Car Registration: 7 of the Biggest Benefits In Montana for 2023
Seeing a luxury car in person is rare, but have you noticed that they always seem to have Montana license plates? Especially in areas like LA, Miami, or New York City, it’s typical to see exotic models like Bugatti and Ferrari with unusual plates. Of course, this begs the question …
Is it because these lesser-populated states are tax havens? Are there less expensive licensing fees? Or are they just “good driving” states? There are legitimate reasons why car owners are registering their cars in different states — or more specifically, Montana.
What to Know About Montana Car Registration
Oftentimes, when you see a supercar with Montana plates, it’s most likely that it’s the product of a wealthier owner. So when making such a massive purchase, like a multi-million dollar vehicle, the taxes and fees can be outstanding.
But what if you only had to pay a couple of thousand dollars in taxes and fees, as opposed to hundreds of thousands? The only condition: you must receive a Montana car registration.
This is because Montana has no sales tax. Oregon, Alaska, Delaware, and New Hampshire also don’t have a sales tax, but Montana is the only state that doesn’t require a physical car inspection. This means you can literally buy a car in Beverly Hills and tag it over 1,000 miles away in Montana.
But how can this possibly be legal?
Montana Car Registration Is Perfectly Legal
There is nothing illegal about opening what’s called a “shell company” in Montana, purchasing a car through that company, and driving it in another state. A shell company is, according to Investopedia, “a corporation without active business operations or significant assets.”
If you plan on doing something like this, it’s wise to consult with an attorney. After discussing the legal issues with them, a Montana business establishment — which is solely purchased and owned by the customer — is set up. Then, the vehicle is assigned to the business, where the vehicle receives a Montana license plate with the business as the new registered owner.
Fortunately, this isn’t an overly difficult procedure, and most people handle it over the phone or by mail. However, while this is technically legal, many insurance companies are against it. A traditional auto insurance company could very well refuse to pay a claim if they can prove that the car is being used in a different location than what is listed on the auto insurance policy.
That’s why it’s smart to avoid “fast-acting web agent” claims and now with a professional attorney who will take you through your residing state’s current rules and regulations, as well as Montana’s, to make sure everything is done legally.
Avoid Sales Tax
For anyone who’s purchased a luxury car, you know that sales tax can be quite a doozy. The first, and biggest, reason why people register their car in Montana is that there’s no sales tax. Even if you don’t purchase a luxury car, but rather an RV or a motorhome, the sales tax can be quite, well …
For instance, if you live in LA, which has a 9.5% sales tax rate, and buy a $3.3 million Bugatti Chiron Sport, you would have to pay about $315,000 in taxes and fees — which is no small amount of money.
However, instead of paying that enormous sum, you could form a limited liability company, or LLC, in Montana. Then, simply purchase the motorhome, RV, or car through the LLC and register the vehicle in Montana.
This Montana LLC scheme has been around for years and is Montana-based lawyers often encourage it. However, it’s worth noting that this method can only work because Montana is the one state which doesn’t require sales tax from its residents when buying a car, RV, or motorhome.
Lower Licensing Fees
In addition to no sales tax, Montana also has the benefit of low licensing and registration fees.
First, how much you pay will depend on the age of the car. For cars that are four years old or newer, the registration fee is $217. Vehicles aged five to 10 years have a fee of $87. And vehicles that are over 11 years old require a registration fee of $28.
Secondly, there are also three different renewal and registration options. The 12-month registration requires that the vehicle owner must pay the registration fee, county option tax, and other registration and special plate fees for the period of 12 months. The 24-month registration option is roughly the same as the 12-month registration, minus the 12-month licensing fee.
Finally, the permanent registration option is available for car owners of smaller vehicles that are over 11 years old. This is a permanent registration, there is no renewal required unless you plan on changing the car title.
The fees for a permanent registration are slightly different, including Montana Highway Patrol Salary, retention fee, county tax, registration rate, and insurance verification fee.
No Annual Inspections
As we stated before, Montana isn’t the only state where there’s no sales tax. However, Montana is the only state that doesn’t require physical vehicle inspections. In many parts of the US, it’s common for car owners to routinely get their car inspected and tested for general safety reasons. However, it’s typically a hassle, and most drivers don’t look forward to inspections.
Standard car inspections generally cost anywhere from $150 to $250, but this doesn’t cover all inspections. There are a lot of other factors that weigh into the total cost of a car inspection.
A luxury car, on the other hand, could cost upwards of several hundred dollars, or more, for an inspection. And when you consider that this is an annual requirement by most states, that number quickly beings to add up.
No Personal Property Tax
Montana has also exempt car owners from paying personal property tax — another additional fee that could save you a pretty penny.
While you don’t need to be a state resident to register your car in Montana, you do need to create an LLC to be exempt from personal property tax. In simpler terms, personal property tax is just another tax you can avoid by registering your car in Montana.
One-Time, Flat-Fee Registration
Another benefit to registering your car in Montana is the one-time flat registration fee for all vehicles over 11 years old. Buying a car isn’t just about the cost of the car itself. There are also extra fees that come with it, but the total cost of those fees is largely dependent on the age of the car.
As we pointed out earlier, the younger the age of the car, the more expensive the registration fee. Luckily, if your car is 11 or more years older, Montana allows car owners to pay a one-time contribution fee of just $28. This is also referred to as a permanent registration. As long as the ownership remains unchanged, you do not have to renew this type of registration.
No Smog or Emissions Test Requirements
Another common test that comes with buying a car is a smog check or emissions test. For the states that do require you to bring your vehicle in for testing, the first thing a technician will check is evaporative emissions and basic exhaust emissions.
The cost for such testing varies, but some technicians can charge up to $60. The cost might also increase if the emissions test is grouped with another kind of inspection.
Luckily, Montana does not require car owners to conduct an emissions test because the state does not have enough populated areas that the federal government would typically classify as unattainable for the Clean Air Act’s air quality regulations.
How to Register Your Car In Montana
Now that we’ve gone over all the benefits of registering your car in Montana, the next question is how to register your car in Montana. Most lawyers will tell you to begin by setting up a Montana LLC and buy your vehicle in the name of the LLC. By purchasing your vehicle — whether it’s a car, RV, or motorhome — in Montana, you’re exempt from various extra taxes and fees.
It’s worth knowing that even if you do this method, not all insurance companies will accept your claim because they’ll see your Montana-registered vehicle operating in a separate state. However, for high-end vehicles, auto insurance companies will likely accept insurance for your car.
All in all, the process of registering your car in Montana, even if you don’t live there, isn’t difficult, but it can be risky. It’s wise to consult with a professional attorney before doing anything. Your attorney will take you through the laws in your state, and the laws in Montana that apply to your situation — all in a legal and comprehensible way.
By buying your vehicle in a sales-tax-free state with no physical inspection or emissions testing requirements, you’ll save thousands in billings — just make sure you’re smart about it.
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