Sales tax effect of selling to Carvana? (vehicle, credit, best)
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Does anybody know how Carvana handles sales tax? I live in NJ so taxes are big thing. Am I responsible for collecting tax, etc. or do they just handle that because they're a big corporation?
I'm planning on selling my old car to Carvana, while buying my new car from a local dealership. It looks like the best option. But when I mentioned that to the dealer he said that I would be better off trading it to them (of course...) because the trade-in value would be credited against the purchase price and reduce sales tax. That's worth several hundred dollars, so if the offer they make me is close I might just do a regular trade-in.
I'm still shopping around the dealerships for the best price.
Does anybody know if it's true I would lose sales tax savings by selling to a company like Carvana?
Must be done at same dealer you are buying from. https://www.nj.gov/treasury/taxation...-Tax-Guide.pdf
A trade-in credit is permitted only when:
• The vehicle the purchaser trades in is a motor vehicle as defined in the Sales and
Use Tax Act;
• The purchaser trades in a motor vehicle to a registered motor vehicle dealership
that takes the trade-in for resale; and
• The contract for purchase of the motor vehicle and the trade-in are executed at
the same time.
Does anybody know how Carvana handles sales tax? I live in NJ so taxes are big thing. Am I responsible for collecting tax, etc. or do they just handle that because they're a big corporation?
I'm planning on selling my old car to Carvana, while buying my new car from a local dealership. It looks like the best option. But when I mentioned that to the dealer he said that I would be better off trading it to them (of course...) because the trade-in value would be credited against the purchase price and reduce sales tax. That's worth several hundred dollars, so if the offer they make me is close I might just do a regular trade-in.
I'm still shopping around the dealerships for the best price.
Does anybody know if it's true I would lose sales tax savings by selling to a company like Carvana?
Any help would be appreciated.
In this instance, the dealer isn't "yanking your chain". When trading in a car, against the purchase of another car, the "agreed value" of your trade-in, is deducted from the total cost of the new car, and then your sales tax obligation is based on that amount of money.
For example, new car cost is $30,000 and used car is valued (based on your negotiating skills) at $9000. Total cash exchanged is $21,000, therefore your sales tax obligation is based on $21,000.
Buy the new car outright, after selling your current car yourself, your sales tax obligation is based on the full $30,000. Therefore, in order to be ahead by selling your car yourself, you have to get more for it than the additional sales tax adds to the outright purchase price.
Where I live, the sales tax is 8%, therefore, in the above example, in order to be further ahead on a "clean deal", you'd have to get at least $720 more for your car than the dealer will allow you on a trade, to "break even", and in my opinion, at least $1000 more, just to make it worth your while....
In this instance, the dealer isn't "yanking your chain". When trading in a car, against the purchase of another car, the "agreed value" of your trade-in, is deducted from the total cost of the new car, and then your sales tax obligation is based on that amount of money.
For example, new car cost is $30,000 and used car is valued (based on your negotiating skills) at $9000. Total cash exchanged is $21,000, therefore your sales tax obligation is based on $21,000.
Buy the new car outright, after selling your current car yourself, your sales tax obligation is based on the full $30,000. Therefore, in order to be ahead by selling your car yourself, you have to get more for it than the additional sales tax adds to the outright purchase price.
Where I live, the sales tax is 8%, therefore, in the above example, in order to be further ahead on a "clean deal", you'd have to get at least $720 more for your car than the dealer will allow you on a trade, to "break even", and in my opinion, at least $1000 more, just to make it worth your while....
True, in most cases. In CA, HI, MD, KY, MI, VA and DC, sales tax is charged on the full selling price of the car, with no credit for trade in values. That's why its prudent to compare out the door prices and not be overly concerned about the bits and pieces that make up the price.
True, in most cases. In CA, HI, MD, KY, MI, VA and DC, sales tax is charged on the full selling price of the car, with no credit for trade in values. That's why its prudent to compare out the door prices and not be overly concerned about the bits and pieces that make up the price.
Thanks guys. With your answers in mind I decided to just do the trade-in at the dealer. I told the dealer straight out what Carvana was offering and told him to try to match it. I knew he'd never be able to quite do that, but I got him to up his offer by a few hundred bucks to "just make my life easier and close the deal." When factoring in the sales-tax issue, it was close enough to what I'd net from Carvana, so I just did the trade-in.
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