Question about sales taxes and trade in

GioM2Comp · 03-06-2016, 12:47 PM

If I want to buy a car for say 50k and the trade in is 30k, do I only pay sales taxes on the 20k difference?

Also if I sell private for say 30k, and then buy a car for 50k, will I have to pay sales tax on the the 50k?

If this is accurate, it looks like that it's best to trade in the car for 30k instead of selling private unless I can get at least 33+ on a private sale to offset the sales tax difference?

I live in NJ by the way. Thanks

STOOF · 03-06-2016, 12:50 PM

I believe the answer is yes to all 3 questions.

vasi_M3 · 03-06-2016, 12:50 PM

You're statements are correct. When you trade in you pay tax only on the difference between the MSRP and trade in value of your car.

Frozen · 03-06-2016, 01:29 PM

Yes you are correct that is how it works in most states, but I've heard it's different in California. Anyone know if it's different in Cali?

MalibuBimmer · 03-06-2016, 02:33 PM

Quote:

Originally Posted by e90m305

Yes you are correct that is how it works in most states, but I've heard it's different in California. Anyone know if it's different in Cali?

It's different in California.

BMWM5NYC · 03-06-2016, 06:29 PM

Taxes are paid on sales price.in NY If it is 50 k and you are BUYING it not leasing it, sales tax is on the price of the item. Down payment makes no difference. Car costs 50000. Does not matter where money comes from to pay cash or cash trade combo. State still wants cut from 50000.

BEM-S4 · 03-06-2016, 07:04 PM

Check w dealer I've spoken to some in the past that told me if you sell car, not to them but to Carmsx or whatever, they can take that paperwork and net against purchase so taxes work the same as if you traded in and bought all at one place. This was a while ago and nothing I ever fully investigated but you should check into it if it's a scenario you are considering. Not sure on sale to private party.

FriskyDingo · 03-07-2016, 01:50 PM

In many states, you can use the bill of sale from selling your car outright for a tax credit against sales tax on your new vehicle.

WHL102 · 03-09-2016, 12:42 PM

Quote:

Originally Posted by bmwm3nyc

Taxes are paid on sales price.in NY If it is 50 k and you are BUYING it not leasing it, sales tax is on the price of the item. Down payment makes no difference. Car costs 50000. Does not matter where money comes from to pay cash or cash trade combo. State still wants cut from 50000.

Are you sure? For calculating taxes, a down payment is not the same as a trade-in in most states.

The following states do NOT offer a tax credit on trade ins: California, Hawaii, Kentucky, Maryland, Michigan, Montana and Virginia.

And the issue is moot in Oregon, which has a 0% sales tax.

Beartato · 03-09-2016, 12:56 PM

Hooray for living in a state with a tax credit for trade ins, saved me $1500 on taxes.

FriskyDingo · 03-09-2016, 01:20 PM

There IS a distinction between money down and trade-in. Example-

1)You buy a $50,000 car. You trade a car with a 20K value. You pay taxes on 30K.

2)You buy a 50K car with 20K down. You still pay taxes on the full 50K.

Reason being, is with the trade in, you already paid taxes on that vehicle. If they didn't give you credit for it, you'd essentially be paying taxes twice. It's a sham.

M3Bimmer77 · 03-09-2016, 01:28 PM

Here's how it goes.

If you buy a $20k car and your trade in is $10k, then you pay taxes on $10. Dealer is basically selling $10k not $20k. Dealer will charge taxes When selling your trade in.

Another story is if you sell yr car to a private party and then go and buy a $20k car. Dealer is selling $20k. So taxes will be on $20k

hgtran21 · 03-09-2016, 01:44 PM

im not sure if thats correct or maybe im wrong. Im from cali and if we buy a car at 10k our trade in is 5k were still paying taxes on the 10k amount.

kent11202 · 03-09-2016, 02:42 PM

Quote:

Originally Posted by hgtran21

im not sure if thats correct or maybe im wrong. Im from cali and if we buy a car at 10k our trade in is 5k were still paying taxes on the 10k amount.

That's because we are in the People's Republic of California and have a LOT of people to support whether they are here legally or not - that's the way the Mercedes Benz out here.....

hgtran21 · 03-09-2016, 05:03 PM

stupid california lol

kent11202 · 03-09-2016, 05:49 PM

Quote:

Originally Posted by hgtran21

stupid california lol

But at least the weather is usually nice.

eluded · 03-09-2016, 10:08 PM

Depends on the state. In the People's Republic of California you pay sales tax on the new purchase, pay sales tax on the used car, and there's no discounts. Oh, it's not a sales tax, it's a use fee.

yet in another country, like say, Arizona. If you trade your car in for 30,000 at the dealer for a $50,000 car you only pay sales tax on 20 grand

eluded · 03-09-2016, 10:11 PM

are you in utah? I rather pay 10 times the taxes and fees than live in that state.

Quote:

Originally Posted by Beartato

Hooray for living in a state with a tax credit for trade ins, saved me $1500 on taxes.

drewnel22 · 03-09-2016, 10:48 PM

Quote:

Originally Posted by kent11202

That's because we are in the People's Republic of California and have a LOT of people to support whether they are here legally or not - that's the way the Mercedes Benz out here.....

Its the same way in Virginia...sucks

kent11202 · 03-09-2016, 10:50 PM

Quote:

Originally Posted by eluded

are you in utah? I rather pay 10 times the taxes and fees than live in that state.

What are the fees/taxes in Bulgaria? I had a friend from Sofia and we never got around to that subject.

eluded · 03-09-2016, 10:57 PM

Quote:

Originally Posted by kent11202

Quote:

Originally Posted by eluded

are you in utah? I rather pay 10 times the taxes and fees than live in that state.

What are the fees/taxes in Bulgaria? I had a friend from Sofia and we never got around to that subject.

I'd rather not talk about those fees. Licensing a car in Europe, the EU, & even in Bulgaria it's extremely expensive compared to the states.

Beartato · 03-10-2016, 09:24 AM

Quote:

Originally Posted by eluded

are you in utah? I rather pay 10 times the taxes and fees than live in that state.

Someone's mad jelly.

03-06-2016, 12:47 PM	#1
GioM2Comp Private 37 Rep 65 Posts Drives: 2021 BMW M2C ZED 6MT Join Date: Jul 2015 Location: North Jersey iTrader: (0)	Question about sales taxes and trade in If I want to buy a car for say 50k and the trade in is 30k, do I only pay sales taxes on the 20k difference? Also if I sell private for say 30k, and then buy a car for 50k, will I have to pay sales tax on the the 50k? If this is accurate, it looks like that it's best to trade in the car for 30k instead of selling private unless I can get at least 33+ on a private sale to offset the sales tax difference? I live in NJ by the way. Thanks
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03-06-2016, 12:50 PM	#2
STOOF Sunburned 243 Rep 1,100 Posts Drives: '16 F83 M4 Convertible 6MT Join Date: Jul 2009 Location: Staten Island, NY iTrader: (2) Garage List 2013 BMW 535i [0.00]	I believe the answer is yes to all 3 questions. __________________ 2016 M4 Convertible 6MT - SO/SO 2013 535i 6MT MSport - Retired 2011 Z4 SDrive35i 6MT- Retired
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03-06-2016, 12:50 PM	#3
vasi_M3 Second Lieutenant 116 Rep 243 Posts Drives: Ex- 2015 M3... now '16 M3 ZCP Join Date: Sep 2015 Location: chicago iTrader: (1)	You're statements are correct. When you trade in you pay tax only on the difference between the MSRP and trade in value of your car.
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03-06-2016, 01:29 PM	#4
Frozen Captain 602 Rep 853 Posts Drives: Frozen Red e92 ZCP Join Date: Dec 2015 Location: SF Bay Area iTrader: (0)	Yes you are correct that is how it works in most states, but I've heard it's different in California. Anyone know if it's different in Cali?
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03-06-2016, 06:29 PM	#6
BMWM5NYC Captain 504 Rep 814 Posts Drives: 2013 F10 Monte Carlo Blue M5 Join Date: Dec 2008 Location: NYC iTrader: (0)	Taxes are paid on sales price.in NY If it is 50 k and you are BUYING it not leasing it, sales tax is on the price of the item. Down payment makes no difference. Car costs 50000. Does not matter where money comes from to pay cash or cash trade combo. State still wants cut from 50000.
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03-06-2016, 07:04 PM	#7
BEM-S4 Major General 4543 Rep 8,942 Posts Drives: Dinan M235, Dinan Sport Wagon Join Date: Oct 2012 Location: Philadelphia iTrader: (5)	Check w dealer I've spoken to some in the past that told me if you sell car, not to them but to Carmsx or whatever, they can take that paperwork and net against purchase so taxes work the same as if you traded in and bought all at one place. This was a while ago and nothing I ever fully investigated but you should check into it if it's a scenario you are considering. Not sure on sale to private party. __________________ 2022 Macan S 2016 F31 328i xDrive Sport Wagon 2006 E46 330ci ZHP Convertible
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03-07-2016, 01:50 PM	#8
FriskyDingo Rather Ambivalent 384 Rep 755 Posts Drives: Spiritedly Join Date: Sep 2013 Location: Trapped In My Mind iTrader: (0)	In many states, you can use the bill of sale from selling your car outright for a tax credit against sales tax on your new vehicle.
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03-09-2016, 12:56 PM	#10
Beartato Major 888 Rep 1,202 Posts Drives: M235i Join Date: Jan 2016 Location: Utah iTrader: (0)	Hooray for living in a state with a tax credit for trade ins, saved me $1500 on taxes.
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03-09-2016, 01:20 PM	#11
FriskyDingo Rather Ambivalent 384 Rep 755 Posts Drives: Spiritedly Join Date: Sep 2013 Location: Trapped In My Mind iTrader: (0)	There IS a distinction between money down and trade-in. Example- 1)You buy a $50,000 car. You trade a car with a 20K value. You pay taxes on 30K. 2)You buy a 50K car with 20K down. You still pay taxes on the full 50K. Reason being, is with the trade in, you already paid taxes on that vehicle. If they didn't give you credit for it, you'd essentially be paying taxes twice. It's a sham.
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03-09-2016, 01:28 PM	#12
M3Bimmer77 Captain 345 Rep 946 Posts Drives: 2011.5 M3 E90 Jet Black Join Date: Feb 2015 Location: West Palm Beach iTrader: (2)	Here's how it goes. If you buy a $20k car and your trade in is $10k, then you pay taxes on $10. Dealer is basically selling $10k not $20k. Dealer will charge taxes When selling your trade in. Another story is if you sell yr car to a private party and then go and buy a $20k car. Dealer is selling $20k. So taxes will be on $20k
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03-09-2016, 01:44 PM	#13
hgtran21 Captain 34 Rep 676 Posts Drives: 335i Join Date: Aug 2007 Location: san diego iTrader: (1)	im not sure if thats correct or maybe im wrong. Im from cali and if we buy a car at 10k our trade in is 5k were still paying taxes on the 10k amount.
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03-09-2016, 05:03 PM	#15
hgtran21 Captain 34 Rep 676 Posts Drives: 335i Join Date: Aug 2007 Location: san diego iTrader: (1)	stupid california lol
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03-09-2016, 10:08 PM	#17
eluded 2JZ-GTE 3174 Rep 4,149 Posts Drives: 340 6MT, 50e, others Join Date: Nov 2015 Location: Sofia iTrader: (0)	Depends on the state. In the People's Republic of California you pay sales tax on the new purchase, pay sales tax on the used car, and there's no discounts. Oh, it's not a sales tax, it's a use fee. yet in another country, like say, Arizona. If you trade your car in for 30,000 at the dealer for a $50,000 car you only pay sales tax on 20 grand
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