In CA, when you trade-in a car or sell a car, do you get a break on sales tax?

Question

For e.g., if you trade-in a car worth $20,000 and buy a car for $30,000, do you pay taxes on the full $30,000 or do you pay taxes on $10,000...($30k - $20K)?

In NJ, you only pay taxes on the $10K...what about in CA?

Also, if you know the answer, i would appreciate it if you could show the source.

this is what i was afraid of...

so 2 for full amount and 1 for net amount...

anyone have a link for proof...just dont know what to believe

Answer 1

You pay on the full amount. My source would be me as I have bought about 8 cars since moving to CA 27 years ago.

P. S. If you're still looking here, check out the DMV for CA. I think it is cadmv.gov but I'm not sure. Just try dmv in a search and see if it will give you state options.

Answer 2

When I bought a car in CA and traded my old one through a dealer, I was only charged tax on the net amount. The value of the trade in was deducted from the price of the new vehicle.

The great state of MO just instituted a new policy on this issue. If you sell a vehicle within 6 months of buying a new one they will give you credit for the sales tax on the vehicle that you sold. Private sales as well as dealer trade-ins are both eligible. But don't think that the state gave anything away with this. It has virtually eliminated the problem of private sellers putting absurdly low prices on bills of sale since that will now cost the seller real money.

Answer 3

I'm sure Chloe is right. you're taxed on the full price.

If you think THAT is bad, gasoline has several local,state, and federal taxes put on it, then SALES tax is figured on all that, so you're paying a tax on a tax.