NJ Sales / Use Tax on 2019 RAV4 Trade-In

Ask the Hackrs
, ,
1

Hello,

My 36 month / 12k yearly lease is coming to an end this month. I visited a Toyota dealership and negotiated a purchase price of $24,000 on $18,164.16 residual ($5,836 trade- in equity)

I plan to use the equity to lease a 2022 Toyota Corolla Cross LE (due to arrive in 2 weeks). I negotiated the dealer price from $29,867 to $28,367 after a $1,000 loyalty rebate and a $500 recent college grad rebate. I hope to apply both the rebates and trade-in as a capital cost reduction.

I created a spreadsheet using my RAV4’s contract as a base to estimate payments on the Corolla Cross (the dealer’s quote doesn’t have all values I need but I was able to get a money factor (not marked up)).

Generally, I am okay with the numbers on the quote sheet. However, the taxes seem outrageous. My understanding on taxation in NJ is as follows:

  • Rebates are taxable.
  • Trade-in equity is not taxable. If anything the trade-in should lower my taxes?
    Using a combination of figures on the quote sheet, I was not able to get to $2,025.16.

Can someone make sense of the dealer’s sales & use tax number? Thank you!

Dealer Quote
Dealer Quote1280Ă—1180 300 KB

Corolla Cross Monthly Calculation
Corolla Cross Monthly Calculation960Ă—1280 472 KB

2

What’s your tax rate?

Multiply it by each of the numbers and you will be able to figure out which number they are basing it on.

At 8% it seems reasonable they are in the ballpark of what it should be. I just used 8% as an example.

3

NJ tax rate is 6.625%

4

Ah, well Matt was able to decipher the issue.

5

Youre not purchasing, so the purchase taxes is irrelevant.

This is just a standard dealer breakdown showing values for purchases and leases.

1 Like
6

So I wait until the car comes in and they hand me a contract with fixed values like rent charge and try to calculate the taxes then?

7

What is your goal? Are you trying to make sure they dont have any hidden charges in there? Are you trying ti determine if this is a good deal?

8

I am trying to determine whether there are hidden fees or potential watch outs.

9

Id start by putting together a lh calculator based on the selling price with the current lease programs to determine what the price should be.

10

There is no such thing as a hidden fee.

1 Like
11

These two sentences seem to be at odds with one another. You didn’t negotiate anything. Dealer is selling at MSRP and using rebates to discount car. If you want the rebates to be counted as CCR, you will be paying MSRP with no discount. Doesn’t matter where the rebates get factored in.

This will be a terrible lease. Just buy it. Toyotas hold their value and Corolla Cross is no different.

1 Like
12

This topic was automatically closed 60 days after the last reply. New replies are no longer allowed.