Trading Your Car Tips
Car buying question. A popular car buying tips website says: ?
“Step 4 – Figure out your trade-in value
Use Kelly Blue Book to estimate the trade-in and private resale value of your car. It will be up to you to decide which way to go. Trading in will be simpler and easier but you will get a higher amount for your used car by selling it privately. You will also need to consider the savings on sales tax that you will receive by trading in your used car. The trade-in value of your used car will reduce the taxable amount of your new car purchase by the value of your used car trade-in. You can play with the numbers on the offer spreadsheet to help you decide what to do.”
Does this actually work (in California)? Seems that would be skipping the tax man, and they wouldn’t go for that.
In California that does not work. Sales tax is due on the price of the new car before the trade in is deducted. Look at page 10 of this pamphlet from the Board of Equalization (agency who collects sales tax for CA)
http://www.boe.ca.gov/pdf/pub34.pdf
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