Tax Credit in CA for trade in to new car?

Creditaddict · ‎10-20-2014

Does anyone know if I trade in a car I purchased this year if I get a tax credit for the taxes paid on the car just purchased towards the taxes due on the new car?

I had purchased a new Infiniti many years ago and then about 2 months later traded it in and bought an SUV at Infiniti and they said because I just bought the other car and paid taxes on the $32kish that i would just need to pay the difference of taxes to the new car ($68k-32k = $34k addtional taxes)

I asked a guy at a dealership hear and I don't think he understood what I was saying because he looked at me like I just said the funniest/stupidest/best perk idea ever!

coterotie · ‎10-20-2014

Generally speaking, when you trade vehicles you only pay sales tax on the net amount.

So you buy Car A for 30,000 pay 6% sales tax 1,800.

Trade car A 3 years later for Car B. Car B sales price $36,000, Car A trade in value a$18,000. So sales tax 6% on 18,000, 1,080.

Not a credit for taxes paid per se.

Now when someone else buys Car A, they pay 6% on that sale so the state isn't out any money.

To me this is grossly unfair as the car is taxed every time it changes hands even though no value has been created. But that is different argument.

@Creditaddict wrote:
Does anyone know if I trade in a car I purchased this year if I get a tax credit for the taxes paid on the car just purchased towards the taxes due on the new car?
I had purchased a new Infiniti many years ago and then about 2 months later traded it in and bought an SUV at Infiniti and they said because I just bought the other car and paid taxes on the $32kish that i would just need to pay the difference of taxes to the new car ($68k-32k = $34k addtional taxes)
I asked a guy at a dealership hear and I don't think he understood what I was saying because he looked at me like I just said the funniest/stupidest/best perk idea ever!

Creditaddict · ‎10-20-2014

@coterotie wrote:
Generally speaking, when you trade vehicles you only pay sales tax on the net amount.

So you buy Car A for 30,000 pay 6% sales tax 1,800.
Trade car A 3 years later for Car B. Car B sales price $36,000, Car A trade in value a$18,000. So sales tax 6% on 18,000, 1,080.
Not a credit for taxes paid per se.
Now when someone else buys Car A, they pay 6% on that sale so the state isn't out any money.
To me this is grossly unfair as the car is taxed every time it changes hands even though no value has been created. But that is different argument.

@Creditaddict wrote:
Does anyone know if I trade in a car I purchased this year if I get a tax credit for the taxes paid on the car just purchased towards the taxes due on the new car?
I had purchased a new Infiniti many years ago and then about 2 months later traded it in and bought an SUV at Infiniti and they said because I just bought the other car and paid taxes on the $32kish that i would just need to pay the difference of taxes to the new car ($68k-32k = $34k addtional taxes)
I asked a guy at a dealership hear and I don't think he understood what I was saying because he looked at me like I just said the funniest/stupidest/best perk idea ever!

okay so basically how I asked him was confusing but I would just pay difference between what they offer me on trade in to the price of new car (most likely)?

Anonymous · ‎10-20-2014

@Creditaddict wrote:
Does anyone know if I trade in a car I purchased this year if I get a tax credit for the taxes paid on the car just purchased towards the taxes due on the new car?
I had purchased a new Infiniti many years ago and then about 2 months later traded it in and bought an SUV at Infiniti and they said because I just bought the other car and paid taxes on the $32kish that i would just need to pay the difference of taxes to the new car ($68k-32k = $34k addtional taxes)
I asked a guy at a dealership hear and I don't think he understood what I was saying because he looked at me like I just said the funniest/stupidest/best perk idea ever!

Sadly in Calofornia you pay sales tax on the purchase price of the new vehicle and the trade in has no effect whatsoever. There are only 8 states where this is true. My state, Maryland does the same thing.

http://finance.zacks.com/calculating-sales-tax-new-car-purchase-tradein-9018.html

Creditaddict · ‎10-20-2014

@Anonymous wrote:
@Creditaddict wrote:
Does anyone know if I trade in a car I purchased this year if I get a tax credit for the taxes paid on the car just purchased towards the taxes due on the new car?
I had purchased a new Infiniti many years ago and then about 2 months later traded it in and bought an SUV at Infiniti and they said because I just bought the other car and paid taxes on the $32kish that i would just need to pay the difference of taxes to the new car ($68k-32k = $34k addtional taxes)
I asked a guy at a dealership hear and I don't think he understood what I was saying because he looked at me like I just said the funniest/stupidest/best perk idea ever!
Sadly in Calofornia you pay sales tax on the purchase price of the new vehicle and the trade in has no effect whatsoever. There are only 8 states where this is true. My state, Maryland does the same thing.

http://finance.zacks.com/calculating-sales-tax-new-car-purchase-tradein-9018.html

Thank you.

so that's why he looked at me all crazy and stupid!

and now I will be keeping the car!

Anonymous · ‎10-20-2014

@Creditaddict wrote:
@Anonymous wrote:
@Creditaddict wrote:
Does anyone know if I trade in a car I purchased this year if I get a tax credit for the taxes paid on the car just purchased towards the taxes due on the new car?
I had purchased a new Infiniti many years ago and then about 2 months later traded it in and bought an SUV at Infiniti and they said because I just bought the other car and paid taxes on the $32kish that i would just need to pay the difference of taxes to the new car ($68k-32k = $34k addtional taxes)
I asked a guy at a dealership hear and I don't think he understood what I was saying because he looked at me like I just said the funniest/stupidest/best perk idea ever!
Sadly in Calofornia you pay sales tax on the purchase price of the new vehicle and the trade in has no effect whatsoever. There are only 8 states where this is true. My state, Maryland does the same thing.

http://finance.zacks.com/calculating-sales-tax-new-car-purchase-tradein-9018.html
Thank you.
so that's why he looked at me all crazy and stupid!

and now I will be keeping the car!

It definitely sucks. As you have found out it can cost the buyer several thousand of dollars. Your idiot salesperson should have known what you were talkng about. Must have been a noob

sccredit · ‎10-20-2014

I have never heard of this in CA in 20+ purchases

jim44 · ‎10-20-2014

CA, Sadly it's true about California. NO sales tax credit is allowed on the trade value of a new or used motor vehicle. Even if you purchase a vehicle in another state you'll be subject to the sales tax laws of your state of residence if applicable. @ Irish, not all car salespersons are idiots. I work for a car dealer and we pride ourselves in training our sales people all about sales tax laws in our state. However we don't expect them to know the sales tax rate in every state and we do sell a heck of a lot of cars and trucks online and at our two lots for residences of other states as well as Europe and Canada. Maryland doesn't charge sales tax, they charge an excise tax on the fair market value of the motor vehicle. Several other states are similar or they charge ad valorem or highway taxes. Only three states that I know of don't charge any kind of taxes on the purchase of a motor vehicle.

Anonymous · ‎10-20-2014

@Creditaddict wrote:
@coterotie wrote:
Generally speaking, when you trade vehicles you only pay sales tax on the net amount.

So you buy Car A for 30,000 pay 6% sales tax 1,800.
Trade car A 3 years later for Car B. Car B sales price $36,000, Car A trade in value a$18,000. So sales tax 6% on 18,000, 1,080.
Not a credit for taxes paid per se.
Now when someone else buys Car A, they pay 6% on that sale so the state isn't out any money.
To me this is grossly unfair as the car is taxed every time it changes hands even though no value has been created. But that is different argument.

@Creditaddict wrote:
Does anyone know if I trade in a car I purchased this year if I get a tax credit for the taxes paid on the car just purchased towards the taxes due on the new car?
I had purchased a new Infiniti many years ago and then about 2 months later traded it in and bought an SUV at Infiniti and they said because I just bought the other car and paid taxes on the $32kish that i would just need to pay the difference of taxes to the new car ($68k-32k = $34k addtional taxes)
I asked a guy at a dealership hear and I don't think he understood what I was saying because he looked at me like I just said the funniest/stupidest/best perk idea ever!

okay so basically how I asked him was confusing but I would just pay difference between what they offer me on trade in to the price of new car (most likely)?

Glad you got this cleared up. Now, im just curious as to how much the dealer is giving vs retail/private party value? What kind of car and what condition? I purchased a truck 7 months ago... wanted to see if i had any options to trade in or if its too soon. I have a Jeep SRT8 2012. which seems to hold their value well. NADAs shows trade in value to be around the same thing I purchased for 7 months ago. Could I assume the dealer will give me a trade in value similar to NADA?

Creditaddict · ‎10-20-2014

I always go to carmax for trade ins