trade in + paying tax

xmx250 · 04-03-2007, 07:50 PM

I have a question. Lets say i was to trade in my new car in one or two years. Would i have to pay tax on the new car that i recieve all over again?

Is there any way to avoid paying tax when trading your car? lets say if you trade it in three months or so?

this might sound stupid but i heard someone say that you dont pay tax when you do a trade or something like that.............. So i wanted to confirm if theres any truth to that whatsoever.

hoanger · 04-03-2007, 07:59 PM

? really? I've never heard of that before.
I'm in Canada so it may be different.. but as far as I know, trying to get tax out of the deal is like trying to hit two birds with one stone; hardly ever happens.

I'm pretty sure the tax is still there, regardless of trade in?

***organiz3d_chaos*** · 04-03-2007, 08:01 PM

I am pretty sure you are gonna pay tax no matter what

xmx250 · 04-03-2007, 08:04 PM

So when you do a quick trade not only do you get hit with that initial depreciatian but you also get hit with tax again....... that sucks

hoanger · 04-03-2007, 08:06 PM

That's how it works...

your car has been used, thus depreciation
the car you want is probably new, thus tax

you always seem to lose in a trade unless the person is stupid and trades something really good for something really dumb.

kingule · 04-03-2007, 08:07 PM

No tax if the price will be equal.If not,than you pay tax only from the difference.

Vince · 04-03-2007, 08:17 PM

You pay tax, the "trade Difference". The price of the car - your trade in = waht you pay taxes on.

20000 (new car)
14000 (trade)
6000 that you pay tax on.

Simple.

mike c · 04-03-2007, 08:21 PM

I agree to an extent. Might depend on the state, or the dealer.

When I traded my 2001 civic in for my S2000, I was given $10,500 for the civic towards the 26K on the S2K. So I paid taxes on the difference of the two. This is what made it worth it for me to trade it in, since I was only wanting $11K for the civic anyways(remember this was years ago), and I planned on buying the S2K for that price anyways.

But when I traded my last car in towards the Si, the dealer said I had to pay taxes on the price of the new car, period.

hoanger · 04-03-2007, 08:40 PM

Quote:

Originally Posted by mike c

I agree to an extent. Might depend on the state, or the dealer.

When I traded my 2001 civic in for my S2000, I was given $10,500 for the civic towards the 26K on the S2K. So I paid taxes on the difference of the two. This is what made it worth it for me to trade it in, since I was only wanting $11K for the civic anyways(remember this was years ago), and I planned on buying the S2K for that price anyways.

But when I traded my last car in towards the Si, the dealer said I had to pay taxes on the price of the new car, period.

I hate to go off topic.. but was the S2000 new?
I assume its in USD as well...

In Canada... the S2000 to start off is I think $47k? the last time I checked.

But that is a good trade in! lucky

Stylinhonda · 04-03-2007, 08:47 PM

I went to Sam Swope Honda World here in KY and they said they said in KY they can't do the trade thing.

But at Neil Huffman they said if I traded in I would pay the difference. Taxes suck.

xmx250 · 04-03-2007, 08:51 PM

The paying the difference in tax thing seems fair. Maybe thats what the person i was talking to was saying.........

But then some of you are saying you had to pay full taxes on the new vehicle???

Vince · 04-03-2007, 08:53 PM

You've got to remember that this is going to vary from state to state...I'm speaking of Missouri and Texas, it may not apply in NY.

xxhaimbondxx · 04-04-2007, 08:15 PM

I was trading one used car for the other used one, only paid tax on the difference. Same thing applies to the new car. To the dude that was taxed as he bought a new car, I think that's illegal and is considered to be a double taxation where you get taxed on your used car, then you get taxed on that amount of your new car again. You might wanna check with a tax attorney.

xmx250 · 04-04-2007, 08:34 PM

So could trading your car to the dealer be a possible benefit (in some situations) than selling private party??

since if you sell your car private party you will have to buy the new car and pay full tax on it?

The_D_Money · 04-04-2007, 09:13 PM

You're more than likely to get more money selling it privately since dealers are going to give you bottom dollar for your car. Or they can play the numbers game and not budge on the price of the car you are going to purchase and make it look like they're giving you more than your trade is worth. In regards to taxation, I traded in my '06 Roush (bought used) for an '07 LX, I think they gave me $25k for the Roush (which was financed and I only had for 1 month), and the civic was $17k, I didn't have to pay tax on the Civ. because the value of the trade was more than the car that I was buying. Had they given me $16,999 for the Mustang, not only would I have told them where to go and how to get there, but I would have paid tax on the $1 difference.

mike c · 04-04-2007, 09:57 PM

Quote:

Originally Posted by hoanger

I hate to go off topic.. but was the S2000 new?
I assume its in USD as well...

In Canada... the S2000 to start off is I think $47k? the last time I checked.

But that is a good trade in! lucky

Yeah, the S2000 was used when I bought it, only had 7K miles though. Stylinhonda has it now, I miss that car! Oh well the Si is just as fun(not really, but close)

MBK · 04-04-2007, 10:09 PM

you pay tax on the difference

exbauer · 04-05-2007, 12:13 AM

Quote:

Originally Posted by xmx250

I have a question. Lets say i was to trade in my new car in one or two years. Would i have to pay tax on the new car that i recieve all over again?

Is there any way to avoid paying tax when trading your car? lets say if you trade it in three months or so?

this might sound stupid but i heard someone say that you dont pay tax when you do a trade or something like that.............. So i wanted to confirm if theres any truth to that whatsoever.

You only pay tax on the new amount minus the trade. So, if you buy a $30,000 and your trade is worth $20,000. You just pay tax on $10,000.

That is how it is in TX and IL. Not too sure about other places.

truflip · 04-05-2007, 12:20 AM

the tax u pay is for the difference in the cost of two cars..
ur trade 10k,
car u want 15k,
u pay tax on 5k
in some locations

stinger11 · 04-05-2007, 01:17 AM

thats why you buy the car in a unincorporated part of the state which = no state sales tax (see Green Valley is good for something lol)

04-03-2007, 07:50 PM	#1 (permalink)
xmx250 Senior Member Join Date: Oct 2006 Location: Westchester, N.Y. Age: 21 Posts: 6,093 iTrader: 1 / 100%	trade in + paying tax I have a question. Lets say i was to trade in my new car in one or two years. Would i have to pay tax on the new car that i recieve all over again? Is there any way to avoid paying tax when trading your car? lets say if you trade it in three months or so? this might sound stupid but i heard someone say that you dont pay tax when you do a trade or something like that.............. So i wanted to confirm if theres any truth to that whatsoever.

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04-03-2007, 07:59 PM	#2 (permalink)
hoanger Senior Member Join Date: Apr 2006 Location: Calgary, Alberta Posts: 4,605 Jason iTrader: 1 / 100%	? really? I've never heard of that before. I'm in Canada so it may be different.. but as far as I know, trying to get tax out of the deal is like trying to hit two birds with one stone; hardly ever happens. I'm pretty sure the tax is still there, regardless of trade in?

04-03-2007, 08:01 PM	#3 (permalink)
*organiz3d_chaos* VIP Member Join Date: Aug 2006 Location: Stillwater, OK Posts: 1,097 Billy iTrader: 2 / 100%	I am pretty sure you are gonna pay tax no matter what

04-03-2007, 08:04 PM	#4 (permalink)
xmx250 Senior Member Join Date: Oct 2006 Location: Westchester, N.Y. Age: 21 Posts: 6,093 iTrader: 1 / 100%	So when you do a quick trade not only do you get hit with that initial depreciatian but you also get hit with tax again....... that sucks

04-03-2007, 08:06 PM	#5 (permalink)
hoanger Senior Member Join Date: Apr 2006 Location: Calgary, Alberta Posts: 4,605 Jason iTrader: 1 / 100%	That's how it works... your car has been used, thus depreciation the car you want is probably new, thus tax you always seem to lose in a trade unless the person is stupid and trades something really good for something really dumb.

04-03-2007, 08:07 PM	#6 (permalink)
kingule Member Join Date: Mar 2007 Location: Chattanooga,TN Age: 31 Posts: 63 Mark iTrader: 0 / 0%	No tax if the price will be equal.If not,than you pay tax only from the difference.

04-03-2007, 08:17 PM	#7 (permalink)
Vince Senior Member Join Date: Jan 2007 Location: Platte City, MO Age: 35 Posts: 901 Stephen "Vince" Carter iTrader: 0 / 0%	You pay tax, the "trade Difference". The price of the car - your trade in = waht you pay taxes on. 20000 (new car) 14000 (trade) 6000 that you pay tax on. Simple.

04-03-2007, 08:21 PM	#8 (permalink)
mike c Senior Member Join Date: Mar 2006 Location: Louisville, KY Age: 28 Posts: 169 Mike C iTrader: 3 / 100%	I agree to an extent. Might depend on the state, or the dealer. When I traded my 2001 civic in for my S2000, I was given $10,500 for the civic towards the 26K on the S2K. So I paid taxes on the difference of the two. This is what made it worth it for me to trade it in, since I was only wanting $11K for the civic anyways(remember this was years ago), and I planned on buying the S2K for that price anyways. But when I traded my last car in towards the Si, the dealer said I had to pay taxes on the price of the new car, period.

04-03-2007, 08:47 PM	#10 (permalink)
Stylinhonda Senior Member Join Date: Mar 2007 Location: Louisville Posts: 510 Stephen iTrader: 0 / 0%	I went to Sam Swope Honda World here in KY and they said they said in KY they can't do the trade thing. But at Neil Huffman they said if I traded in I would pay the difference. Taxes suck.

04-03-2007, 08:51 PM	#11 (permalink)
xmx250 Senior Member Join Date: Oct 2006 Location: Westchester, N.Y. Age: 21 Posts: 6,093 iTrader: 1 / 100%	The paying the difference in tax thing seems fair. Maybe thats what the person i was talking to was saying......... But then some of you are saying you had to pay full taxes on the new vehicle???

04-03-2007, 08:53 PM	#12 (permalink)
Vince Senior Member Join Date: Jan 2007 Location: Platte City, MO Age: 35 Posts: 901 Stephen "Vince" Carter iTrader: 0 / 0%	You've got to remember that this is going to vary from state to state...I'm speaking of Missouri and Texas, it may not apply in NY.

04-04-2007, 08:15 PM	#13 (permalink)
xxhaimbondxx Senior Member Join Date: Dec 2006 Location: Brooklyn=>Albany, NY Posts: 530 iTrader: 0 / 0%	I was trading one used car for the other used one, only paid tax on the difference. Same thing applies to the new car. To the dude that was taxed as he bought a new car, I think that's illegal and is considered to be a double taxation where you get taxed on your used car, then you get taxed on that amount of your new car again. You might wanna check with a tax attorney.

04-04-2007, 08:34 PM	#14 (permalink)
xmx250 Senior Member Join Date: Oct 2006 Location: Westchester, N.Y. Age: 21 Posts: 6,093 iTrader: 1 / 100%	So could trading your car to the dealer be a possible benefit (in some situations) than selling private party?? since if you sell your car private party you will have to buy the new car and pay full tax on it?

04-04-2007, 09:13 PM	#15 (permalink)
The_D_Money Senior Member Join Date: Jan 2007 Location: Central Florida Posts: 299 Don iTrader: 1 / 100%	You're more than likely to get more money selling it privately since dealers are going to give you bottom dollar for your car. Or they can play the numbers game and not budge on the price of the car you are going to purchase and make it look like they're giving you more than your trade is worth. In regards to taxation, I traded in my '06 Roush (bought used) for an '07 LX, I think they gave me $25k for the Roush (which was financed and I only had for 1 month), and the civic was $17k, I didn't have to pay tax on the Civ. because the value of the trade was more than the car that I was buying. Had they given me $16,999 for the Mustang, not only would I have told them where to go and how to get there, but I would have paid tax on the $1 difference.

04-04-2007, 10:09 PM	#17 (permalink)
MBK Senior Member Join Date: Nov 2006 Location: Park Ridge Posts: 6,056 Mike iTrader: 3 / 100%	you pay tax on the difference

04-05-2007, 12:20 AM	#19 (permalink)
truflip Senior Member Join Date: Dec 2006 Location: Ottawa, ON Age: 22 Posts: 7,294 iTrader: 11 / 100%	the tax u pay is for the difference in the cost of two cars.. ur trade 10k, car u want 15k, u pay tax on 5k in some locations

04-05-2007, 01:17 AM	#20 (permalink)
stinger11 Member Join Date: Mar 2007 Location: Tucson Age: 22 Posts: 51 iTrader: 0 / 0%	thats why you buy the car in a unincorporated part of the state which = no state sales tax (see Green Valley is good for something lol)