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      11-25-2011, 03:30 PM   #1

Drives: 2008 E92 M3
Join Date: May 2010
Location: SoCal (Irvine & LA)

iTrader: (1)

No tax savings when trading in a car in California! :(

I have learned recently that the state of California does not allow for the consumer to benefit from the tax savings on a vehicle's trade in value. This sucks since I just relocated here from NJ and I'm contemplating a trade in.

Originally Posted by excerpt from California Board of Equalization document
Are trade-ins taxable?
Yes. The value of a trade-in is considered taxable. For example, if you sold a car for $20,000 and accepted a trade-in valued at $4,000 as partial payment, tax would be based on the $20,000 selling price (that is, you would not deduct the value of the trade-in from the sales price of the car being sold when computing sales tax.
For example:
Trade in my car for $50K
7% tax on that is $3,500
Buy car that is $100K
That money is basically going toward the new car.
New car is essentially $100K - $3,500 = $96,500
Works in other states
Doesn't work in CA.

Anyway, here's my concern. I'm buying a car in Ohio, to register/drive the car in California. Do I have any loopholes to save me some money here?

Additional info:
I'm living out of a hotel here.
All my info is based in NJ

The dealer spoke to the title lady and they said they need to collect taxes on the car since it will be titled/registred in CA. I always thought it was irrelevant where I'm registering the car, since I'm trading it in in ANOTHER state. I have heard mixxed stories from other out-of-state dealers. Unfortunately, the one sticking to their guns is the one I'm buying the car from.

Anybody have insight into this? Please help.

I'm going to try asking the dealer to register the car to NJ (since I will have NJ registration for at least another year) but ship it to CA. Possible? I don't want to get in trouble, and I don't want the dealer to either.
2008 E92 M3 | 2007 Honda S2000 | 2001 Honda S2000 | 1997 Turbo Integra