tax break on trade in?

im89

is it true that if you trade in a car you pay only pay tax on the difference? i live in new york. only reason im asking is because another memeber states so in a post and i thought this was true for new york i spoke to a lady at a dealership and she had no clue what i was talking about. just want to know if anyone in new york ever traded in and paid tax for the difference. thanks


"Do you recommend that consumers trade in? Or should they sell on their own?

Weismann: It depends on what they've got. If you bought right in the first place, you might have something to trade in that will bring a good price.

Mills: Heck, yes. It is quick and doesn't cost you as much as you might think, especially if you drive the right kind of car. Also, many states (all the ones I have worked in) give you credit for your trade when figuring sales tax. For instance, let's say you are buying a $20,000 car, and have a $12,000 trade. The sales tax in my state is 6 percent on cars. You will pay taxes on $8,000 in most states, instead of $20,000, for a savings of $720."

http://www.edmunds.com/advice/buying...4/article.html

wilsonp

You were so close:
What Fees Should You Pay?

Looks like New York has a Y in the trade-in column for taxing trade-ins, so out of luck just like me!

Of course, the fact that the Virginia line appears completely wrong is a bit worrisome... maybe you should just check the NY DMV site.

Checking further, looks like they might be wrong for New York as well:
http://www.tax.state.ny.us/pubs_and_...le_receipt.htm

says no:

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im89

"If there is a "Y" in the "Trade-In Sales Tax" column of your state, you are only taxed on the difference between the new car and your trade-in. So, if your new car costs $20,000 and you are getting $7,000 for your trade-in, you will be taxed on the difference, or $13,000. If sales tax in your state is 8 percent, this will save you $560. "

accoriding to this a "y" means there is a tax break since you only pay the difference in on the purchase. i dont know am i reading wrong?

Lee123

The quote above from the NY state tax site (in the post by wilsonp) states that you only pay tax on the difference. I believe you can count on that site for accurate info.

Mike

thats the way it works in Georgia too, so if you are debating selling or trading in a car worth 25000, at 6% sales tax, thats a 1500 savings, which in many cases, makes it just as cost effective as selling yourself outright, and a lot less hassle.

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im89

thanks guys. i just wonder why the lady at the dealer ship knew nothing about this. hopefully i could get this deal. if there is anyone from new york or knows for sure please let me know how trade in's are taxed.

MC

or you can get the best of both worlds... on my last car i had a private sale of my car lined up but i had the dealer handle it so i got the private sale price plus i saved on the tax difference between it and my new car...

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Juno

Less hassle for everyone that way.

FuszNissan

Every state is different.

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Jacky

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.

im89

Thanks thats exactly what I wanted to know.