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Car Forum / Honda Cars / August 2005When to add tax?
When buying new vehicle when should the tax be added in? 1. Vehicle Price 2. Tax 3. Trade-in 4. Down payment OR 1. Vehicle Price 2. Trade-in 3. Down payment 4. Tax Thanks > When buying new vehicle when should the tax be added in? > 1. Vehicle Price [quoted text clipped - 9 lines] > > Thanks The purchase agreement (receipt, if you will) with my current car listed the items in this order. This was 5 years ago and applies to cars purchased in Canada. So I don't know if it is the same in other countries. 1. Vehicle price 2. Trade-in 3. Provincial sales tax on total vehicle price less trade-in 4. Federal sales tax (GST) on total vehicle price (trade-in does not apply) 5. Down payment I would have to believe that it's your first option. Think of your trade in as a cash payment towards the total cost of the car you are going to purchase. Nick >When buying new vehicle when should the tax be added in? >1. Vehicle Price [quoted text clipped - 9 lines] > >Thanks QUAKEnSHAKE@webtv.net (QUAKEnSHAKE) wrote in news:2916-4309FBE2- 619@storefull-3158.bay.webtv.net: > When buying new vehicle when should the tax be added in? > 1. Vehicle Price [quoted text clipped - 10 lines] > Thanks > Wher are you located? In the province of Ontario in Canada the tax is added AFTER the trade-in's value has been removed from the purchase price. Other jurisdictions calculate tax BEFORE the trade-in's value has been removed from the purchase price. In all areas I know of, the tax is calculated BEFORE you pay the downpayment. If it were any other way, you could buy your car outright with cash and pay no tax at all.  SignatureTeGGeR® The Unofficial Honda/Acura FAQ www.tegger.com/hondafaq/ > When buying new vehicle when should the tax be added in? > 1. Vehicle Price [quoted text clipped - 7 lines] > 3. Down payment > 4. Tax In the U.S.A., 1. Vehicle Price 2. -trade-in 3. +accessories 4. +Tax 5. -Trade-in 6. = money to be given to dealer >> When buying new vehicle when should the tax be added in? >> 1. Vehicle Price [quoted text clipped - 15 lines] > 5. -Trade-in > 6. = money to be given to dealer Oops, I had Trade-In 2x... In the U.S.A., 1. Vehicle Price 2. -trade-in 3. +accessories 4. +Tax 5. -down payment 6. = money to be given to dealer (from other source, i.e. loan provider) > In the U.S.A., > 1. Vehicle Price [quoted text clipped - 3 lines] > 5. -down payment > 6. = money to be given to dealer (from other source, i.e. loan provider) So a trade of equal value generates NO tax? >> In the U.S.A., >> 1. Vehicle Price [quoted text clipped - 5 lines] > > So a trade of equal value generates NO tax? In my experience, yes. In fact, MANY years ago (1990) I had a change of careers and locale so I went to trade in my '89 Volvo 76-GLE for a '90 Jeep Wrangler (moved to Hoboken and was commuting to the city quite often) and I paid no tax on the transaction. In fact, I even got money back as the trade-in vehicle was worth more than the new vehicle. Remember, tax has already been paid (by the car owner) on the vehicle being traded in. Just like with your personal taxes. You don't pay income tax on the total amount you earned, but rather the difference between what you earned and appropriate deductions. >>> In the U.S.A., >>> 1. Vehicle Price [quoted text clipped - 18 lines] > income tax on the total amount you earned, but rather the difference > between what you earned and appropriate deductions. That does apply in some states, but certainly not Calif. Its purchase price + accessories and options with tax added. >>>> In the U.S.A., >>>> 1. Vehicle Price [quoted text clipped - 22 lines] > That does apply in some states, but certainly not Calif. Its purchase > price + accessories and options with tax added. You didn't specify when the trade-in is computed. Of the items you /did/ list, that's the same all over. > In the U.S.A., > 1. Vehicle Price [quoted text clipped - 3 lines] > 5. -Trade-in > 6. = money to be given to dealer In my state, trade in is subtracted before sales tax is calculated. >> In the U.S.A., >> 1. Vehicle Price [quoted text clipped - 5 lines] > > In my state, trade in is subtracted before sales tax is calculated. See my other post about a minute after the one you responded to. This one is obviously in error as I listed trade-in 2x. Can we get some dealership to confirm this in the states? I find it hard to believe that this is the case. If you do it this way, you are essentially ripping the state off of tax money. How could a trade in be considered as a discount to the value of a brand new vehicle? Nick >> When buying new vehicle when should the tax be added in? >> 1. Vehicle Price [quoted text clipped - 15 lines] >5. -Trade-in >6. = money to be given to dealer > Can we get some dealership to confirm this in the states? I find it > hard to believe that this is the case. If you do it this way, you are > essentially ripping the state off of tax money. How could a trade in > be considered as a discount to the value of a brand new vehicle? As someone who has bought many cars in the U.S.A. I can confirm this. You are not ripping them off of tax revenue as you have already paid sales tax on the vehicle that is being used to discount the purchase price of the new/newer vehicle. Remember, tax has already been paid (by the car owner) on the vehicle being traded in. Just like with your personal taxes. You don't pay income tax on the total amount you earned, but rather the difference between what you earned and appropriate deductions. > Can we get some dealership to confirm this in the states? I find it > hard to believe that this is the case. If you do it this way, you are > essentially ripping the state off of tax money. How could a trade in > be considered as a discount to the value of a brand new vehicle? No, sales taxes are calculated according to the taxing authority's rules, i.e., in NY State, sales tax is calculated per NY State's rules - no rip off involved. Keep in mind the sales tax has already been paid on the trade in. > Can we get some dealership to confirm this in the states? I find it > hard to believe that this is the case. If you do it this way, you are > essentially ripping the state off of tax money. How could a trade in > be considered as a discount to the value of a brand new vehicle? In Ontario Canada, the dealers fought very hard for this very thing and the province agreed to it. The dealers claimed they were losing sales to "curbsiders" (ordinary people, not licensed dealers), who were supposedly robbing the dealers because they did not have the same regulatory hurdles or overhead, and were able to sell used cars cheaper because of that. By removing the trade-in value BEFORE tax was calculated on the purchase price, they enabled the dealers to tell prospective buyers that there was a substantial financial benefit to giving the dealer your old car instead of selling it privately. It amounts to a tax subsidy for licensed dealers. And of course, YOU as the consumer, pay any and all taxes levied in any country... The practical effect of the tax change has been threefold: 1) The private used car market in Ontario for recent models has dried up almost completely 2) Used cars now cost substantially more than they did before 3) I hate dealers even more now that I did before. SignatureTeGGeR® The Unofficial Honda/Acura FAQ www.tegger.com/hondafaq/ Hi. First off I live in Illinois. I see there was some disagreement in this discussion here on when the tax is added. Although I have bought 3 new vehicles ,in IL, I never really thought about this and dont recall what order. This time around while I was doing some figuring it dawned on me that it makes a difference. So have we come the the conclusion that its : 1. Vehicle price 2. Trade-in 3. Tax 4. Down-payment Thanks again for the help. >When buying new vehicle when should the tax be added in? >1. Vehicle Price [quoted text clipped - 7 lines] >3. Down payment >4. Tax Depends on your location. I'm in NY and recently bought a new car. We paid tax on the full price of the car. There were cash back incentives on the car, and we had to pay tax on those too. ---------------- Alex In my state, the tax is calculated on the MSR or some state derivative of that, regardless of what kind of deal you make or what you trade or don't trade. >When buying new vehicle when should the tax be added in? >1. Vehicle Price [quoted text clipped - 9 lines] > >Thanks |
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