I was sure I wanted to sell my car myself, since I'll get more money than trading it in. But the car salesman told me trading in is good because it reduces the amount of tax I pay on my new car. Is this true? Is it a good idea?
2007-06-11 04:19:48 · 7 answers · asked by Anonymous in Cars & Transportation ➔ Buying & Selling
So the amount I put down isn't taxed either? What if I go through my bank for financing?
2007-06-11 04:29:42 · update #1
Yes in most states, you are taxed on trade differance.
example
$20,000car
x5%=$1,000 in tax
or
$20,000car
-$10,000 trade
-------------------
=$10,000 differance
x5%=$500 in tax
10 yrs in auto biz
can save you alot or a little, depending on your tax rate, and how much your car is worth.
2007-06-11 04:23:52 · answer #1 · answered by misty m 4 · 0⤊ 0⤋
Money down is money down. Whether you gave him cash or a trade in, you are reducing the total amount of the sale.
If you are going to buy the new one first and then sell the old one, you will pay the fully taxable amount.
If you sell the cat first and give them a nice down payment, it is no different than the trade in. Get as much privately as you can and then put it down on the new car to save tax money.
Also, keep in mind whether you want strange people coming to your house to look at and drive your car. Selling privately is not always easy. It may take some time to get the money you want. The dealer always gives you as little as possible on a trade in.
2007-06-11 04:27:27 · answer #2 · answered by Chief 4 · 0⤊ 0⤋
A few of these answers are wrong. You are taxed on the total sale minus the trade. It does not matter whether you put money down or financed. You are still taxed on it. If you buy a 20,000 car and give a 5,000 trade, you are taxed on 15,000. It doesn't matter whether you financed the whole or none, you pay tax on the 15,000.
So trading could save you some money, but you probably won't get nearly as much for your car as you would during a private sale.
2007-06-11 05:10:32 · answer #3 · answered by Jay P 7 · 0⤊ 0⤋
trading car tax break
2016-01-27 00:07:08 · answer #4 · answered by Dexter 5 · 0⤊ 0⤋
This depends on which state you live in. California, Hawaii, Maryland, and Michigan do NOT give tax credit on trade-in vehicles. Also, Alaska, Delaware, Montana, New Hampshire, and Oregon do not currently charge sales tax on vehicle purchases. I hope this helps to clarify.
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2016-04-14 02:27:31 · answer #5 · answered by Anonymous · 0⤊ 0⤋
well yes and no...if they give you anything on the trade in it reduces the cost and therefore reduces the sales tax, but unless its significant (maybe more than a k or so) i suspect that its better to sell it yourself. I wonder about his motivation...they need cars to resell?
2007-06-11 04:25:01 · answer #6 · answered by David B 6 · 0⤊ 0⤋
iIF YOU BELIEVE THAT WOW!
ITS ALL ANOTHER MARKETING SCHEME.
FROM EXP.
I LEASE...YOUR CAR HAS DEPRECIATED
IN VALUE....YOU WOULD GET MORE TO SELL IT ON
YOUR OWN.
SELL YOUR CAR, USE THAT MONEY FOR DOWN
PAYMENT ON OTHER.
DON'T LISTEN TO THIS GAMES YOU LOOSE.
BEST
2007-06-11 04:31:25 · answer #7 · answered by Anonymous · 0⤊ 1⤋