rk911
Thinks s/he gets paid by the post
https://fromthetrenchesworldreport....-jan-1-dealers-call-it-double-taxation/255972
[sigh]. it never ends.
[sigh]. it never ends.
Sigh. I know. Another naked link.
No idea why a trade in, or not, would affect a new car tax. It's just a part of the car payment to me.Sigh. I know. Another naked link.
Beginning Jan 1, buyers will pay sales tax on the entire amount of a new car, even if they trade in a used car as part of the payment. Previously, the value of the trade in was deduced from the sales price for tax calculation.
No idea why a trade in, or not, would affect a new car tax. It's just a part of the car payment to me.
No idea why a trade in, or not, would affect a new car tax. It's just a part of the car payment to me.
Yes, but it isn't necessarily a no-brainer in MN at least. If I trade a $10K car there is no sales tax on the $10K. If I buy for cash, I get clipped $765 in extra sales tax that I have to make up on the private sale just to break even.I would never trade in a car anyway. Private sales only. Dealers ALWAYS try to hose you on a trade.
Is there any other product that gets this kind of favorable tax treatment?In the past, the tax was only on the net cost of the car after trade in.
Now it will be on the price of the new car before trade in.
So the end result is a lot more $ outlay to the purchaser whether it is financed or not.
You're sort of creeping up on a fairness argument with that question. Remember that fairness is not really the objective of the exercise:Is there any other product that gets this kind of favorable tax treatment?
Yes, but it isn't necessarily a no-brainer in MN at least. If I trade a $10K car there is no sales tax on the $10K. If I buy for cash, I get clipped $765 in extra sales tax that I have to make up on the private sale just to break even.
Is there any other product that gets this kind of favorable tax treatment?
I get that. I just don't understand why it would be that way. If I buy a new computer, the sales tax is on its whole price, not the cost less a traded-in computer.In the past, the tax was only on the net cost of the car after trade in.
Now it will be on the price of the new car before trade in.
So the end result is a lot more $ outlay to the purchaser whether it is financed or not.
It is not. The actual purchase price is what you pay for the new car. A trade-in is immaterial unless a state gives you that tax break. What's different than if you sell the old car separately & apply those proceeds to the new car? Answer: nothing. But OK, the change is a tax increase. What else is new?In most states (but not Illinois next year), the value of the trade-in is deducted from the tax assessment, since you already paid tax on that car. Your actual purchase price is the new car price, less the trade-in.
and the buyer in a private sale will pay sales tax to the state based on book value and not what was paid for the car. coming and going. and a lot of folks are going.I would never trade in a car anyway. Private sales only. Dealers ALWAYS try to hose you on a trade.
I would never trade in a car anyway. Private sales only. Dealers ALWAYS try to hose you on a trade.
I get that. I just don't understand why it would be that way. If I buy a new computer, the sales tax is on its whole price, not the cost less a traded-in computer.
Auto sales taxes running 8.75% to 10.25%? That's a small fortune.
Alabama state sales taxes on automobiles and boats are 2.5%, and we receive credit for the trade in values.
I used to work in Illinois but lived in Indiana. IN was bad enough. But many of my co-workers lived in Illinois because taxes in Wisconsin, where their offices sat, were far higher even--if that's possible.
Is there any other product that gets this kind of favorable tax treatment?
This could hurt Chicago car dealers where tax is 10.25%. Car buyers could save $2k in tax on a $50k car by buying in a no city, no county tax area in Illinois at 6.25%.
No, I tried that.
Bought the new vehicle, paid the lower tax where the dealer was located.
Six months later I get a bill from the State for the rest of the sales tax because I was located in a higher tax rate city than the dealer.