does insurance pay tax on totaled car?
a while back I posted about the accident i had with the z. so now its official, the car is totaled. i got the update from the insurance yesterday. my question, for those in the know, would the insurance pay me the 13% tax on top of whatever value they determine the car to be worth? since the car is totaled, i can theoretically replace it with an equivalent car in the same price point using the money from the insurance that i will get, lets say market value of the car. but in reality, the acutal price of the equivalent car would be above the market value by about 13% due to greedy government tax. so therefore my choices are either to pay tax out of pocket or to downgrade to a cheaper car and use the left over money to pay the tax. but that would mean the insurance is not really fulfilling their obligation to put me in an equivalent car in the case of a total loss.
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Yes, but its the depreciated value so it may not be as much as what you paid. I think ALLSTATE is the only insurance that pays what you paid for your vehicle new? If you financed your car the best thing to do is get GAP insurance. A lot of people on here try to talk people out of getting it. But it saved my azz when I had my accident. I recieved a nice fat check from gap as well as from my insurance. And total process time was 10 days after my insurance. Which my insurance took 6 weeks to get me fully paid out. :( so gap did better.
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Pharmacist, at least in the US from what I know, car insurance settlements for a totaled vehicle are not income taxable (at least at the federal level). |
Call your insurance company. Nobody here knows the details of your policy.
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In the US that depends on the state. |
As said above... you might want to call your insurance company and talk with them about it.
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Honestly, I think the greedy government is double dipping. They already taxed the cars once when they were new. They should not be taxing them again when sold used. really, if a car was sold 10 times, with each time the government getting a 13% tax revenue (assuming no depreciation), that means the government earned on that car 130% of the car's value as tax!!!! :shakes head: |
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I maybe completely off but from what I understand of tax laws (at least when I took tax accounting) is that you only pay taxes once on the same item. So if you paid taxes on the purchase, you do not pay taxes again on the same vehicle. When insurance gives you money for your car, due to it being totalled, it should be no different than you selling a car to the insurance company, and the seller shouldn't pay taxes on a vehicle he already paid taxes for @ purchase.
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dmv doesnt care. there is a reason why you pay sales tax on used cars
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I didn't get taxes back when my car got totaled last year, I just got what the insurance company determined to be fair market value for the car. I was lucky though, I got such a great deal on the new car that the fair market value for the car used was $700 more than I paid for it including taxes. Bought the car for $25k + taxes and other stuff for a total of $28k. Insurance company offered my $27,700 for the car after it was totaled.
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Also, sales taxes are levied at the state level and will vary between states as to the form it takes, but I think all states apply the idea of new sale = taxable. Congress technically has the power to levy a nationiwide sales tax, but has so far not implemented one. |
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