Question about sales tax on used vs. new car transaction

Buying/Selling
,
1

I understand that if I trade a used car into a dealer and buy a new car,
I only have to pay sales tax on the DIFFERENCE. But can I do this on a
private party transaction as well?

For example, what if I sold a
used car and within 30 days purchased a new one. Could I apply the sale
of the first car and use it to decrease my tax liability for the second
vehicle?


If not, it would seem that this is an unfair benefit being provided
to the WA state dealers… And they use it in negotiations to argue why I
should trade it in versus selling private party.

2

My guess is no. But this is a question for your particular states’s tax authority. The answer could be different state by state.

3

Not in our state. Before you register the vehicle, you have to show proof of payment to the state for state sales tax on a car…it had better be real close “their” book value or MFSRP for dealer. And no, there are no trade ins between private parties here.

4

“what if I sold a
used car and within 30 days purchased a new one. Could I apply the sale
of the first car and use it to decrease my tax liability for the second
vehicle?”

Not in my state, and I am going to venture, not in other states either.
The OP wants what he wants, but unfortunately two separate transactions at two different times cannot be merged to his advantage for the purpose of saving on sales tax. If he was to analyze this on a logical basis, the OP should see that he is asking the state taxing authorities to act as his accountant, and like it or not, this is not the way that things work in the real world.

5

Trade-in is one thing. Selling a car and buying another is not the same.


Good luck trying to make this pitch to the taxing authority.
6

In OK anway, you WILL be taxed on the full price of the car and you will pay a tire disposal fee per tire; even on a brand new car.

7

On the other hand, few people declare the value they received for their private sale car on their income tax forms…

8

Down here they get you no matter what. If a car has a real value of say 10 grand and you buy a ragged out POS with a blown motor for 800 bucks they’re going to tax you on the 10 grand.

9

For Arkansas, you pay the sales tax on the difference between the sale of the old car and the price of the new one, assuming both transactions are within 30 days. Its a very state dependent issue.