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re: Selling a car vs Trading it in
Posted on 6/4/14 at 9:28 pm to Jack Bauers HnK
Posted on 6/4/14 at 9:28 pm to Jack Bauers HnK
quote:
Jack Bauers HnK LSU Fan Baton Rouge Member since Jul 2008 1687 posts Online re: Selling a car vs Trading it in (Posted on 6/4/14 at 9:22 pm to Vood) If you trade in, you only pay taxes on the difference between the car you buy and the car you trade. If you sell your car for cash and then go buy another car, you pay tax on the full amount you bought it for.
This. If you're buying a $30k car and trade yours in for $25k, you only pay taxes on $5 grand as opposed to selling and paying taxes on the final sale price of the car. Guess you'd have to weigh your options and see which way saved you more in the long run.
2
Posted on 6/4/14 at 9:35 pm to Brettesaurus Rex
quote:
This. Not to mention it's completely hassle free without any strings attached or ever worrying about who you sold it to coming back after the fact.
You don't really have to worry about that either if you do an as is bill of sale and have it notarized.
Selling a car is a joke, and sale is always final.
You're worried about liability, have it inspected for $100 or less and enclose it with the bill of sale as a sign of good faith.
Posted on 6/4/14 at 9:36 pm to jdaute2
The taxes you all have mentioned seems like I should really consider trading it in.
Posted on 6/4/14 at 9:37 pm to Vood
It also depends if you owe anything on the car.
The tax is only on the equity from the trade, not what they give you for the trade.
The tax is only on the equity from the trade, not what they give you for the trade.
Posted on 6/4/14 at 9:41 pm to KosmoCramer
Any good loan calculators you know of that helps me make a better decision by being able to compare trade in vs sell out right?
Posted on 6/4/14 at 9:47 pm to KosmoCramer
quote:
It also depends if you owe anything on the car. The tax is only on the equity from the trade, not what they give you for the trade.
This is not true. Loan amount has nothing to do with taxes.
Posted on 6/4/14 at 9:47 pm to Vood
It's pretty simple math.
Take 24k minus whatever you owe on the car.
Multiply that times the sales tax rate for the jurisdiction you'll be buying the car. That's how much you'll save.
If that tax savings is more than how much more you could get from selling the car outright, then you're better off trading.
There are two variables though, i.e. new car sales price and how much you could net from selling the car outright after fees (autotrader, cars.com etc. and whatever you value your time spent on selling the car as).
So you have to infer a few things, but you should be able to figure it out within a certain degree of confidence.
Take 24k minus whatever you owe on the car.
Multiply that times the sales tax rate for the jurisdiction you'll be buying the car. That's how much you'll save.
If that tax savings is more than how much more you could get from selling the car outright, then you're better off trading.
There are two variables though, i.e. new car sales price and how much you could net from selling the car outright after fees (autotrader, cars.com etc. and whatever you value your time spent on selling the car as).
So you have to infer a few things, but you should be able to figure it out within a certain degree of confidence.
Posted on 6/4/14 at 9:49 pm to MikeBRLA
quote:
This is not true. Loan amount has nothing to do with taxes.
So if you trade in a car worth 12k that you owe 20k on it, you get a 12k tax deduction?
Not the case in Ohio as far as I know.
Posted on 6/4/14 at 9:49 pm to DawgCountry
quote:if you're talking about paying income tax on the sale of your personal vehicle you heard wrong.
You'll pay Taxes if you sell it outright. Factor that in At least I've heard that
Posted on 6/4/14 at 9:58 pm to KosmoCramer
quote:
So if you trade in a car worth 12k that you owe 20k on it, you get a 12k tax deduction?
Sure. Why does the tax man care what you owe the bank for the car? Sales tax is calculated on sales price.
Are saying that if I buy a car for 30K and finance 25k that I only pay tax on 5k? Of course not, it's calculated on sales price. The loan amount has nothing to do with the sales tax.
This is in LA. I have no idea of how other states work.
Posted on 6/4/14 at 10:00 pm to MikeBRLA
quote:
Are saying that if I buy a car for 30K and finance 25k that I only pay tax on 5k? Of course not, it's calculated on sales price. The loan amount has nothing to do with the sales tax.
No, I'm saying that if I buy a car for 30k and trade in a car that I own free and clear that is worth 30k, I pay zero sales tax.
But if I buy a car worth 30k and trade in a car that is worth 30k that I owe 20k on, I pay tax on the 10k difference.
I'm not talking about the financing on the back-end, I'm talking about the financing on the car that is being traded. That's where the tax breaks come in.
Posted on 6/4/14 at 10:04 pm to KosmoCramer
Posted on 6/4/14 at 10:06 pm to KosmoCramer
Your first statement is correct. The second is not. The loan balance has nothing to do with tax calculations.
Posted on 6/4/14 at 10:08 pm to MikeBRLA
Hmm either I'm remembering wrong, or it's different in Ohio.
Posted on 6/4/14 at 10:09 pm to Vood
You only pay taxes on the difference of the new car total. New car is 36k msrp. Trade in is 10k. U pay taxes on 26k
Posted on 6/4/14 at 10:17 pm to Tshiz
Mike is right
Posted on 6/4/14 at 10:19 pm to PygmalionEffect
Cool, thanks for clearing that up 
Posted on 6/4/14 at 10:22 pm to Vood
You sell it on your own and you don't get the trade in value tax free on the purchased car. Plus you have to deal with the idiot you sold it to if anything goes wrong with it.
In the end you will come out better selling it on your own. Trading in is a small $ sacrifice for convenience and peace of mind.
In the end you will come out better selling it on your own. Trading in is a small $ sacrifice for convenience and peace of mind.
Posted on 6/5/14 at 4:18 am to ShermanTxTiger
sell it on craigslist. its not hard and i sell over 50k in cars a year on craigslist. wake up
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