Buying & Trading a Car Out of State - Sales Tax

Quick question, thinking about buying an out-of-state car and also trading my car in to the same dealer. Under this scenario, do I still just pay Texas sales tax for the difference of the two cars? Or do I lose the tax credit for my trade-in?

Thanks

 

I don't know if the taxing rules have changed in the last few years, but as I recall from an out-of state car purchase I made several years ago, you will pay Texas sales tax on the net purchase price (i.e., after the trade allowance).

 

The dealer should net out the trade on the invoice. You will pay tax on the net.

I did a similar transaction in AZ last year.

 

As said earlier, you'll pay tax on the net price (new car price - trade in valuation).

Just make sure the dealer shows this properly on the buyer's order/bill of sale. Also, depending on which state you're buying the car in, you may have to pay tax to that state, and will get credit towards that when you register in Texas if you can show you've already paid tax.

 

You will only pay sales tax to what county you live or register the car. You will not pay sales tax where the car was bought, especially if it is out of state.

They may charge you other taxes like dealers tax but not sales tax.

Check the deal sheet before you sign anything. It should include all charges. It will not include any sales tax unless they are the ones that will register the car. But they will send what was collected to your county.

I have bought most of my cars out of state and I pay sales tax out of pocket when I register the car.

 

Don't you have to pay sales tax when you register it in TX?

And if you don't register it, and trade it in without doing so, I suspect the tax credit may not apply (since no tax has ever been paid on the car...), but I'm neither a lawyer or an accountant.

If you do only have to pay the incremental sales tax, it would appear to me that you have discovered a rather massive tax loophole in purchasing new cars.

 

Unless you buy it in CA and drive it off the lot.

 

I bought my first 911 with newport beach and they did collect sales tax but only because they wanted to register it in my county. The tax collected was based on my texas address. But then, they had problems and ended up refunding the total sales tax to me and i ended up registering myself. Still in the end, they just did not listen to me. I have done it a number of times, you do not pay sales taxes where you bought the car especially if that is not where you live.