Ok, let me know if I figured this right!! I bought a new car and traded my other car in, and I was $1795 upside-down on my trade in. The net cost of the new car is $18751. So do I take the $18751 and add the $1795 to get the cost that I'm going to have to pay the sales tax on?
2007-07-13 05:15:10 · 7 answers · asked by *~HoNeYBeE~* 5 in Business & Finance ➔ Taxes ➔ United States
No. You take the sales price of the new car and subtract the trade-in allowance for your old one. That's what you pay the tax on. Any amounts added from being upside-down on the old note are irrelevant to the sales tax calculation.
2007-07-13 07:04:31 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Hi Honeybee. I left an answer on your previous question. Here's what I'm a bit confused on. You've already bought the car, right? It's financed already as you said in your other question. It's a done deal and you're driving around town sporting your new vehicle. :-) You don't have to pay sales tax on anything now.
Your sales tax on the vehicle was figured into the total purchase price, which went into your loan. If you look on your sales invoice there should be a line item on there for the sales tax.
And yes, usually your "upside down" amount is added to the price of the car, but if the $18K is the net as you say, any allowance, etc. has already been added to that amount. And when I say "upside down" I'm not referring to your actual note on the old car. I'm assuming that you got less for your car than what you owed, so instead of getting an actual trade-in "allowance", the difference is usually tacked on to the cost of the new car. That's what you mean by the $1795, right?
If that's the case, and the sticker/agreed price was $18K, then yes, I believe the $1,795 gets added first in lieu of an "allowance", then tax is calculated on that.
Hope this helps!
2007-07-13 05:55:23 · answer #2 · answered by starlight_chic06 3 · 1⤊ 0⤋
This depends on how they show the trade in on your buyer's order. Some dealers in order to get you financed will add the negative equity to the sale price. You pay tax on the increased sale price of the new vehicle. If they just list it as negative equity (cash deficiency) then you should not be charged sales tax on the extra owed but you will be financing the negative balance. This can be offset by increasing your down payment.
2007-07-13 05:51:00 · answer #3 · answered by Noah M 3 · 1⤊ 0⤋
Normally if you purchase a car from out of state, you will be charged a "user tax" which is the same percent as the sales tax when you register the car in your state.
2016-05-21 13:47:50 · answer #4 · answered by erminia 3 · 0⤊ 0⤋
Depending on what state you live in, it should be the price paid, minus the trade in. So the new car is $18,751 - $1,795 for a total taxable ammount of $16,956 (if your facts are correct)
I wish you all the best,
Lonnie
2007-07-13 05:20:20 · answer #5 · answered by Anonymous · 1⤊ 1⤋
no the actual invoice price of the car will be the taxable portion...you already paid on the upside down money.
2007-07-13 05:18:50 · answer #6 · answered by David B 6 · 2⤊ 0⤋
Haggle with them alittle. Did you know if a car sales man bumps you 10 dollars in payment he makes the dealer ship 600 dollars and normally 25% of that goes to salesman.
http://www.tbirdsonline.com
2007-07-13 05:18:58 · answer #7 · answered by Anonymous · 1⤊ 3⤋