Quote:
Originally Posted by xxhaimbondxx
Don't forget that when you trade-it, you pay tax on the difference which in your case is about $800. So if you trading in your car for $10,000, in reality you get $10,800 for it.
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That math isn't correct. (sales price - trade-in value) x X% would be what you're talking about. So if X (your state's tax rate on new vehicles) was 5%, you'd save $50 in sales tax for every $1,000 of trade-in value.
In NC it's only 3% on new cars (because they tax us EVERY year on our cars). So he's only paying the 3% tax on the difference - this year. Next year (& every year after), he'll pay tax on the full value of the car regardless of trade in. But getting $2,000 more for your trade only comes out to an additional $60 in taxes saved in NC - hardly worth considering.
So if he was considering trading for $10,000 or selling outright for $12,000, he'd save $300 in taxes but would end up losing $1,700 overall.