Very important finance question
10-15-2011, 05:42 PM
#1
JK Super Freak
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Very important finance question
I'm embarrassed to ask this question being that I sold cars for 3 years and pretty much forget much of the rules about taxation. I put an order in for a 2012 JKU Rubi today 
and received 2 different quotes from 2 dealerships. the first one i walked away from because i got fed up with them for saying they had a rubi and when i got there after a 30 min drive, i found out it was an order for another customer. but my question is: i am trading in a lease that they are buying from the bank and rolling in neg equity. My trade is worth more than the taxable amount of the rubi. the first dealer quoted me $502 tax because thats the difference, and the dealer i ordered from quoted me $2359 tax saying that that was the right tax and the other dealer was scamming me. but now that i look back at the buyers order i noticed they put the negative equity in the "total taxable amount" and the for tax put 2350 which is wrong then. from what i remember when selling cars, we tax on the difference of the trade and the new car even when it is being bought from a bank. please respond with knowledge asap so i can cancel the order before they cash my check deposit and i have to fight them. i called the first dealer and the told me it was a trick because when they send the tax to the state they will fix the numbers back and put the extra money back into the front end of the deal. 
and received 2 different quotes from 2 dealerships. the first one i walked away from because i got fed up with them for saying they had a rubi and when i got there after a 30 min drive, i found out it was an order for another customer. but my question is: i am trading in a lease that they are buying from the bank and rolling in neg equity. My trade is worth more than the taxable amount of the rubi. the first dealer quoted me $502 tax because thats the difference, and the dealer i ordered from quoted me $2359 tax saying that that was the right tax and the other dealer was scamming me. but now that i look back at the buyers order i noticed they put the negative equity in the "total taxable amount" and the for tax put 2350 which is wrong then. from what i remember when selling cars, we tax on the difference of the trade and the new car even when it is being bought from a bank. please respond with knowledge asap so i can cancel the order before they cash my check deposit and i have to fight them. i called the first dealer and the told me it was a trick because when they send the tax to the state they will fix the numbers back and put the extra money back into the front end of the deal.
10-15-2011, 06:03 PM
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JK Super Freak
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thanks for your help anyway whether youre right or wrong. some may argue that i dont own the car, the bank does therefore i dont get any tax transfer but i did pay a percentage of tax when leasing the car so i have to get at least something and when the dealership buys out a lease, they do not pay tax on it. 
10-15-2011, 06:04 PM
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JK Super Freak
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10-15-2011, 06:17 PM
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You only pay sales tax on the difference of the purchase price minus the trade in value. The payoff has no part of tax calculations unless they roll the negative equity into the purchase price.
Last edited by armycop; 10-15-2011 at 06:20 PM.
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10-15-2011, 08:27 PM
#8
Originally Posted by notsoricer
I am rolling neg equity. So it's sale price + neg eq - trade = taxable amount?
10-16-2011, 04:36 AM
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Because you are turning in a lease, you only get tax credit for your positive equity. Negative equity would indeed hurt your tax because your sale price would go up.
The positive equity from a lease trade in is the same as a cash down payment.
At least, in MA that's how it works - since you don't -own- the previously leased vehicle you can't get tax credit for it's entire value - only the positive equity that you receive.
The positive equity from a lease trade in is the same as a cash down payment.
At least, in MA that's how it works - since you don't -own- the previously leased vehicle you can't get tax credit for it's entire value - only the positive equity that you receive.
10-16-2011, 07:07 AM
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Because you are turning in a lease, you only get tax credit for your positive equity. Negative equity would indeed hurt your tax because your sale price would go up.
The positive equity from a lease trade in is the same as a cash down payment.
At least, in MA that's how it works - since you don't -own- the previously leased vehicle you can't get tax credit for it's entire value - only the positive equity that you receive.
The positive equity from a lease trade in is the same as a cash down payment.
At least, in MA that's how it works - since you don't -own- the previously leased vehicle you can't get tax credit for it's entire value - only the positive equity that you receive.