SlipperyPete

I'm currently working with a dealer to trade my leased car in on a new G but was wondering about sales tax. I know if sell the car I would be responsible for paying the sales tax on the residual value but if I trade it, this does not apply correct?

Thanks in advance...

Mike

Falker11

iTrader: (3)

Quite the opposite...depending on your state they will tax you only on the new car price minus the trade in value

SlipperyPete

Sorry, maybe I should clarify this. The Residual is just under 20k on my current lease, so I have not paid any taxes on this yet. Now I'm trying to get 21k from the dealer in trade as I'm a bit under in mileage on this vehicle. I will be leasing the G as well, so I'm really just going to use the extra for the inception fee and first month lease payment. But what I'm worried about is the state (NE) wanting the tax on the 20k from my current lease.

Thanks,

Mike

Falker11

iTrader: (3)

doesnt matter...i traded in my civic with 12500 residual on it i paid tax on only ~40k - 12500 = 27500*tax rate...they use the full trade in value regardless of how much is owed on the vehicle still (could depend on state i suppose, mine was PA)

SlipperyPete

Thanks Falker, in PA do you pay taxes on the whole vehicle when you start the lease? In NE we only pay the taxes on the portion we lease.

Mike

Falker11

iTrader: (3)

Only on the portion leased.
I know it sounds like a deal too good to be true getting out of the tax like this and I didnt believe it at first until my contract was finalized and this was indeed the case. When I thought about it more I just figured the state will make the tax back when the car you trade in is sold again and taxed on the sale amount.