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How do Dealership Owners Buy Cars?

Aug 5, 2022
First Name
I am working on getting my auto dealer license (CA). This will be a side hustle for me, so I am projecting to buy/sell 5 +/- cars per year (because I love cars). I own a C-Corporation and I am the only employee which gives me a lot of freedom. Here is my question: What is the best way for an owner to obtain a car for personal use (including use by my spouse and kids) while minimizing income tax and sales tax? How to dealership owners typically buy cars for themselves?


Mar 17, 2014
First Name
That's a good question, and one that will get you as many answers as the people you ask.

The safest way to do it is to sell the car to yourself for your true cost. There will be no tax liability on the dealership side because you didn't make a profit. Yes, you will pay sales tax and license fees on the personal side, but that is just part of owning a car.

The easiest way to do it is just drive a vehicle that is in your dealership inventory by putting a dealer plate on the back. Is this the "correct" way to do it? Probably not in CA, but I don't really know.

The way NOT to do it is to sell the vehicle to yourself for 10% of the real value of the vehicle. It doesn't pass the smell test at DMV, and it is about as clear of an example of tax manipulation as exists. Don't sell yourself a $40,000 Lexus for $4,000 with the "leg" you're planning to stand on being anything along the lines of "it is my car and my dealership and if I want to lose $35,000 on a car then that's my business". It doesn't work like that when you are the buyer and the seller.


Full Sticker + Prep
Apr 30, 2009
First Name
I am not a tax CPA/attorney - but I stayed at a Holiday Inn last night.

Buy a vehicle, stick a dealer plate on it, write it down monthly for depreciation, whatever the depreciation charge in/out yourself against your W2 income you pay yourself from the business <<< best way I have seen it done, and have done it myself - valid in almost any state (including CA)

Side note -- get a good tax CPA person.

Side note #2 -- I am actually a Hilton guy.