Can this please be fixed? Using trade equity for a new lease, in every case, is taxed. Had several people use this feature with sizable equity in their trades, and their deals are off by the tax on that equity.
Not in VA, AFAIK
Do you mean if the trade is also leased? If owned/financed, it does apply in my state. Here is an excerpt from the NJ Auto Tax Guide:
- Can a dealership apply the value of a trade-in from a purchaser as a credit for a
leased motor vehicle?
Yes. The value of a trade-in can be used to reduce the tax base if the execution of the
contract for lease and the trade-in occur at the same time. The dealership must obtain
the certificate of title for the trade-in and retain a copy of it as part of the lease transaction.
The credit for the value of the trade-in from the lessee can be used when calculating the
Sales Tax due on a short-term or long-term lease using either the original purchase price
method or the total lease payments method. (See Question 19)
I think he meant people are putting Lease Equity as ‘Trade In’ instead of down.
And interesting VA covers that, someone asked in another state earlier and I was wondering how it works.
I think so, too, which is why I asked that question. Maybe it just needs a checkbox added that people can tick “Trade equity tax-exempt (check your own state laws).”
this is correct. a trade in ny/nj is taxed even if traded into a dealer.
In Massachusetts, trade in equity applied as cap reduction is not taxed if it meets following criteria listed in 1(b):
Yes good clarification - you get tax credit if you owned the trade in but not if it was a leased vehicle.
I vaguely remember @wam22 raising this when we launched our Finance calculator.
Tax on trade-in varies greatly by states. Some states provide tax credits on the trade-in value; some states provide tax credit on only the trade-in equity; Some states tax trade-in based on wether the buyer owns the title; some states treat the trade-in differently based on whether it is a purchase or lease…
We didn’t get enough feedback on the matter at the time so we didn’t further refine the calculator. It would be helpful if we can gain more clarifications from the community, if this is deemed worthwhile at all given its complexity relative to the added value.
Maybe just a toggle like the taxes on lease payments that way it is the user’s responsibility to verify the info.