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Message
Tax value off on a trade in but not private sale
Posted on 8/22/17 at 10:23 am
Posted on 8/22/17 at 10:23 am
I did not know many states offer tax value on a trade in, why do they do this but not on a private sale? Auto union get this pushed? Seems BS that you get that when going through a registered dealer but not private party?
6
Posted on 8/22/17 at 10:43 am to baldona
The tax code is 72,000 pages long a lot of shite doesn't make since. In Texas if and engineer or architect does design work for you it's a non-taxable professional service, but if a graphic designer or skilled draftsman does it it's taxable. I don't try to understand it anymore, I just try to follow the rules.
Posted on 8/22/17 at 10:54 am to baldona
I'm in Alabama-my understanding is that your net taxes are the same, or at least very close.
We just sold our old car and bought a used one. When we go to register, we take the bill of sale for the old one and get a pro rated credit for the taxes we paid in full on it earlier this year.
Since the full taxes were collected at the time I purchased the new car, I will receive a check from my county's department of revenue.
We just sold our old car and bought a used one. When we go to register, we take the bill of sale for the old one and get a pro rated credit for the taxes we paid in full on it earlier this year.
Since the full taxes were collected at the time I purchased the new car, I will receive a check from my county's department of revenue.
Posted on 8/22/17 at 12:03 pm to baldona
You can get tax credit on a private sale, provided you also purchase the new car with those proceeds. I'm not sure if it has to be from the same person or not.
What I've done in the past, is use the dealer in purchasing the new car through as the middle man for the sale. I've heard it called an "in and out Trade" or "quick trade". They basically process the paperwork for the sales, and saves you the taxes.
What I've done in the past, is use the dealer in purchasing the new car through as the middle man for the sale. I've heard it called an "in and out Trade" or "quick trade". They basically process the paperwork for the sales, and saves you the taxes.
Posted on 8/22/17 at 2:02 pm to baldona
Tax codes are written for many reasons. Sometimes it is to benefit a specific group that has donated either money or influence. Other times it is a general effort to incentivize behavior.
If I had to guess, this specific rule would fall under the former because there is a potential significant tax incentive to sell your car to a dealer instead of selling it privately. It is likely an attempt to counter the tax savings of purchasing a car from a private seller where sales tax is not taken at all.
If I had to guess, this specific rule would fall under the former because there is a potential significant tax incentive to sell your car to a dealer instead of selling it privately. It is likely an attempt to counter the tax savings of purchasing a car from a private seller where sales tax is not taken at all.
Posted on 8/22/17 at 5:21 pm to seawolf06
quote:
It is likely an attempt to counter the tax savings of purchasing a car from a private seller where sales tax is not taken at all.
You have to pay taxes on a private sale the same as a dealership. Unless you decide to lie about the sales price on the paperwork.
Posted on 8/23/17 at 7:48 am to Mingo Was His NameO
quote:
The tax code is 72,000 pages long a lot of shite doesn't make since. In Texas if and engineer or architect does design work for you it's a non-taxable professional service, but if a graphic designer or skilled draftsman does it it's taxable. I don't try to understand it anymore, I just try to follow the rules.
One of the first things I learned when I took tax classes in college is to not waste time trying to understand why certain rules are the way they are
Posted on 8/23/17 at 7:58 am to seawolf06
quote:
the tax savings of purchasing a car from a private seller where sales tax is not taken at all.
I am not sure how you get your cars registered, but when you register a vehicle, you must pay taxes. . . . .
Posted on 8/23/17 at 12:22 pm to lnomm34
quote:
I am not sure how you get your cars registered, but when you register a vehicle, you must pay taxes. . .
Exactly. I'm still youngish and I've only personally bought 3 cars and never from a dealer. But everytime I've gone to register my car, I pay sales tax. Not once have they ever asked if this was a replacement car and what was my previous car sold for? I've never even heard of asking, maybe I should? WTF is that is the case, how is this not more common knowledge?
FWIW, I usually buy a newer vehicle and then sell my current vehicle.
Posted on 8/23/17 at 2:30 pm to seawolf06
quote:
It is likely an attempt to counter the tax savings of purchasing a car from a private seller where sales tax is not taken at all.
Sales tax on private sales are collected when the buyer tries to register the vehicle in their name. Buyer needs a bill of sale to register it and they collect taxes based on what the bill of sale shows the purchase price as. Only way to save on the tax is for the buyer and seller to lie on the bill of sale and list the sale price lower than it really was.
Posted on 8/23/17 at 3:43 pm to baldona
Are you in Alabama?
It sounds like the only thing you've missed out on is the pro-rated refund of the ad valorem taxes you paid at the beginning of the year. And, you may not be missing that...if your tag office is transferring your old tag to your new car, you probably haven't missed anything. If you are getting a new tag, you've probably left a few bucks on the table....but probably not enough to lose sleep over.
It sounds like the only thing you've missed out on is the pro-rated refund of the ad valorem taxes you paid at the beginning of the year. And, you may not be missing that...if your tag office is transferring your old tag to your new car, you probably haven't missed anything. If you are getting a new tag, you've probably left a few bucks on the table....but probably not enough to lose sleep over.
Posted on 8/24/17 at 1:00 pm to Tiger Prawn
quote:
Only way to save on the tax is for the buyer and seller to lie on the bill of sale and list the sale price lower than it really was.
In many states, they have moved to a system which ignores the Bill of Sale. Instead they declare what the vehicle is worth, similar to how they tax houses.
Posted on 8/27/17 at 8:26 am to baldona
Not sure what you're asking. If it I said re sales tax credit on trades, it varies by state.
In Louisiana, if you buy anew car for $20k and trade in a car valued at $5K, you pay sales tax on only $15K. If you sell that $5k car to an individual, however, you pay sales tax on the whole $20K.
Arkansas has a deal where you can submit a form for a sales tax rebate if you sell your old car/trade to a private buyer within a couple months of purchasing a new car. That gives you more leverage in trade in negotiations. All states should do it.
In Louisiana, if you buy anew car for $20k and trade in a car valued at $5K, you pay sales tax on only $15K. If you sell that $5k car to an individual, however, you pay sales tax on the whole $20K.
Arkansas has a deal where you can submit a form for a sales tax rebate if you sell your old car/trade to a private buyer within a couple months of purchasing a new car. That gives you more leverage in trade in negotiations. All states should do it.
Posted on 8/28/17 at 10:49 am to baldona
many states will still allow you to do it on a private sale if you get it sold within something like 30 days of buying the new one.
Posted on 8/28/17 at 10:50 am to LSUtigerME
quote:
You can get tax credit on a private sale, provided you also purchase the new car with those proceeds. I'm not sure if it has to be from the same person or not.
It will vary by state. KS only allows it for trade-ins. Your paperwork has to be drawn up to show that your trade in went towards the purchase of your new car or you can't do it.
Be very careful what your state laws are.
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