Car Trade-in (credit, buy, sell, Texas)

[wellynelly]

I am little curious about how sales tax credit works for trading in a old car. If I am buying a new do I need to trade in at the same dealership to get the credit, or can I sell it to some other dealership that might get me a better price and still retain the tax credit. This is coming from NJ if that helps. Any advice would be much appreciated.

[texdav]

Depends on state. In Texas the trade in value is deducted from the sale price and you only pay tax on that.

[reed303]

Nice try, but no. It's 2 different transactions. Not a "trade-in" anymore. The credit only works when the trade-in is used to reduce the actual bottom-line sales price of the purchase.

Besides, most dealers are not going to give you top price for your used car without the opportunity to sell you the new car also.

[WyoNewk]

^^^ That's how it works in Wyoming, too. It give dealers a little edge, because only THEY can discount the value of your trade-in on your new car. If I sell my car tonight, then go buy a new one in the morning, I've got to pay sales tax on the full book value of the new car. A dealer can deduct the value of my trade-in, so instead of paying sales tax on $50K I only pay it on the difference.

NJ could be different.