trade ins and taxes

There is lots of talk about trading up, selling back to dealers, etc. Has anyone been able to pay tax only on the difference? I am from Hawaii, and some dealers have told me that I would have to pay tax on the entire price of the 2nd vehicle. I suppose it would vary by state.

 

Your dealer can do something called a "courtesy trade". Under this scenario, if you are selling your car to Jim Smith for $50,000 and buying a car from X Ferrari for $150,000, you ask X Ferrari to write the sale up as a "trade" of the $50,000 car for the Ferrari. In a sense, your trade is processed through X Ferrari and sold to Jim Smith. You pay tax on the $100,000 delta.

 

You should ony be paying on the difference between the two.

 

The trade is essentially a reduction in the sale price and as you have already paid sales tax on the vehicle you traded the net number ie the difference is all you should pay State Sales tax on.

 

i live in nj-joe is right

 

All states are different!!! In Cali, you completely repay on new car!!! Hose Job!

 

one of the few goods things about living in the state of Washington - taxed on the net difference. Oh, and no income tax is kind of nice as well

 

I am also in Hawaii and I think on a new car, you pay the sales price regardless of a trade. Used cars there is no tax.
Al

 

In Pennsylvania, you pay tax on the diference. Al

 

I think you are mistaken. In CA you pay the difference but, as noted, the transaction must happen through the same place. In other words, I can't sell you my car and buy the new one from xyz. If I do that I pay the full freight.