Trade in car tax credit question

SerialCoderer · 07-29-2015, 03:56 PM

Quote:

Originally Posted by POS VETT

There are veriations from state to state. In the state of Ohio, if you bought a new car (only) and traded in another car, only the difference is taxed i.e. new car is $15k and trade-in value is $5k, the sales tax applies only to the difference which is $10k.

My question given the following scenario

I have a car worth $10,000 and I owe $10,000 on it. The dealer is willing to pay it off and when I purchase a car that is $25,000. Do I pay tax on $25,000 or $15,000

JARblue · 07-29-2015, 04:05 PM

Quote:

Originally Posted by SerialCoderer

My question given the following scenario

I have a car worth $10,000 and I owe $10,000 on it. The dealer is willing to pay it off and when I purchase a car that is $25,000. Do I pay tax on $25,000 or $15,000

You will not get any tax credit in that scenario. You will pay tax on the full $25K.

SerialCoderer · 07-29-2015, 04:08 PM

Quote:

Originally Posted by JARblue

You will not get any tax credit in that scenario. You will pay tax on the full $25K.

Thanks

DEpointfive0 · 07-29-2015, 04:16 PM

Quote:

Originally Posted by JARblue

You will not get any tax credit in that scenario. You will pay tax on the full $25K.

Yeahhhhh... You'll pay tax on the amount you owe essentially.

Mike · 07-29-2015, 04:53 PM

Quote:

Originally Posted by SerialCoderer

My question given the following scenario

I have a car worth $10,000 and I owe $10,000 on it. The dealer is willing to pay it off and when I purchase a car that is $25,000. Do I pay tax on $25,000 or $15,000

That would be assuming you are buying a $15000 car. If your new car is 25000, the dealer is going to charge you 35000 to cover the upside down balance. you will still be paying tax on the 25k in that case.

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