How to trade in a private party sell vehicle and save money on taxes!!

[trucheli]

Six months ago I decided to trade in my 2008 335i for a 2009 E92 M3. I went to my local dealer and I asked them to look at my car and give me a quote for my vehicle with 12000 miles. I was told $35000 for a vehicle that I have paid $42000 for. So I decided to go the private sell route. I published it in the autotrader, craiglist, roundel magazine and bmw forums.

Last week I sold it for $38000 and I told my buyer that we needed to do the paperwork thru my local dealer to assure that the transaction would be smooth sailing for both of us. They agreed and I was able to show my vehicle as a trade in saving around $2500 in taxes. This works as a pass thru, the dealer buys the vehicle from me and then sells is to my buyer for the same price plus tax registration. You could include the dealer fee and safety inspection in the final price but I decided to take care of that.

For those who would like to trade in their cars and get the best value I think this is the best way to go about it.

[skim]

While it's nice that it worked out for you, to me, one of the incentives for both seller and buyer is the ability to report the sale at a cheaper price so the buyer will be paying less on the registration fee for a private sale.
All in all, I didn't know you could go thru a dealer for this. Nice tip! Thx.

[isugoo]

Originally Posted by trucheli

Six months ago I decided to trade in my 2008 335i for a 2009 E92 M3. I went to my local dealer and I asked them to look at my car and give me a quote for my vehicle with 12000 miles. I was told $35000 for a vehicle that I have paid $42000 for. So I decided to go the private sell route. I published it in the autotrader, craiglist, roundel magazine and bmw forums.

Last week I sold it for $38000 and I told my buyer that we needed to do the paperwork thru my local dealer to assure that the transaction would be smooth sailing for both of us. They agreed and I was able to show my vehicle as a trade in saving around $2500 in taxes. This works as a pass thru, the dealer buys the vehicle from me and then sells is to my buyer for the same price plus tax registration. You could include the dealer fee and safety inspection in the final price but I decided to take care of that.

For those who would like to trade in their cars and get the best value I think this is the best way to go about it.

Not all dealers and state laws work like that.
I did exactly same for my old Nismo R-Tune Z. Dealership buy it and sell it right away to the buyer I brought in.
I tried to do same again but CA law is making dealer work more so they didn't want to do it unless I pay 1k.

You're lucky that your dealer was helpful that way. I miss my old dealership in VA who used to do that as service even if I didn't buy car from them.

[wgf77]

Awesome tip.

[signes]

Good way to do it. To Skim, reporting a lower sale price to the government is not something I would do. Even if you did, in some states (including here in Colorado), registration fees are calculated off original MSRP so it wouldn't matter. For sales tax, you would benefit but risk getting caught for a small-ish gain. Again, wouldn't do that.

[03SG///M3]

Originally Posted by signes

Good way to do it. To Skim, reporting a lower sale price to the government is not something I would do. Even if you did, in some states (including here in Colorado), registration fees are calculated off original MSRP so it wouldn't matter. For sales tax, you would benefit but risk getting caught for a small-ish gain. Again, wouldn't do that.

I am actually in the process of doing this hopefully this week. I have a private buyer about the purchase my car through my local BMW dealer. I was looking to save on the sales tax. Is this Ok? I'm a very honest person so I don't want to risk anything with taxes. Should I just pay the sales tax on the new car too?

[wgf77]

Originally Posted by signes

Good way to do it. To Skim, reporting a lower sale price to the government is not something I would do. Even if you did, in some states (including here in Colorado), registration fees are calculated off original MSRP so it wouldn't matter. For sales tax, you would benefit but risk getting caught for a small-ish gain. Again, wouldn't do that.

Getting caught for what crime? The crime of making it easier for your private buyer to register his car and take delivery without going to the DMV and dealing with idiots??? Totally legal.

[PorscheRacer]

Many states don't discount the taxes for trade in. They consider it cash toward the car and you pay taxes on that part. For those that do, this is a good tip and one I never thought about.

[RRGOO7]

I have done that many times.

[trucheli]

Here in Florida nowadays the Department of Motor Vehicles has a book where they can see the price of the vehicle based on the year and miles. It used to be that you could lower the selling price and the buyer with his Bill of Sale could get a break in the taxes. Not anymore!!

My deal was not for free. I had my 335i advertised for $39,900 six months ago and no takers, lots of brokers trying to get me to pay a fee for them to sell it and lots of people trying to steal it. I was offered $37,000 two weeks ago and I did not sell it. I found the right buyer who loved the car and I know that $38000 was what I wanted. The buyer agreed, but when I went to the dealer they needed to get paid and I don't blame them. Dealer fee and inspection was shy of $1000. But at the same time I was saving $2500 in taxes. Once I paid the dealer fee I was in a better position to negotiate my new vehicle. This time I am not paying a dealer fee again. I think this was a fair deal for the dealer and for me as well. You will always get a better deal on a private sale especially in this economic environment. People are buying more pre-owned vehicles than new ones.

Find a dealer who can work with you, remember that they are in business to make money and you need to build a relationship in order for them to work with you. This is my third ED and I have been doing this because it makes economic sense. This is how to do it:

First, you have to do European Delivery. From the get go you are saving around 7% and if you get a deal at invoice or even $1000 over invoice you still will be ahead. In my case it helps that I don't pay for my airfare because I collect rewards points thru American Express. So my savings depending on the vehicle are around $6000 to $7000. That savings is basically the depreciation on the vehicle in a year term. My 2007 335i was purchased at $40,000 and one year later I've got $40000 as a trade in. On my 2008 I could not get even $40,000 because of the slow economy but still my cost of owning a 2008 335i was $300 a months. I think this beats leasing.

This is a great opportunity to take advantage of the European Delivery Discount on the M3. This is the first time since the E39 that BMW is discounting an M car. You can get into a well optioned M3 coupe or sedan for less than $60,000.

Thanks BMW for allowing us to enjoy one of the best sports cars in the world for such little money. Think what the rest of the world needs to pay in order to own one of this. Even Germans need to spend almost $100,000 euros for the same car.

That's why I am a loyal BMW customer and that's why I would like all the BMW enthusiast to know about how to get the best value for their money.

Thanks for all the replies.

[Voltigeur]

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Yes, clearly two requirements:

(1) as you state, good r'ship w/ dealer so there's cooperation / rationality

(2) a cooperative buyer

It is a great time to be a buyer w/ funds. For myself, somehow I managed to get into the mid-$60s on my ED, but have ticked nearly all the boxes + ext maintenance. Still, compared with what was being paid a year ago = great deal ;-)

You certainly have kept your Bimmer ownership costs low!