You are right assuming you own the car (no liens). You only pay taxes on the difference. I recently traded my car that worth more than what i brought. I didn't have to pay sales tax at all. I have asked multiple dealerships as I shopped around. Most of the time, i had to speak to a manager about it. So if you are going to sell your car privately, make sure you mark up atleast for the tax amount. Let's say you have a car that can be traded in for 10,000. (assuming ny tax is 8% (skip the change)). You would want to sell it for atleast 10,800.
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