Tax/cash question about trading in and then leasing new
Thread Starter
Senior Member
Joined: Oct 2002
Posts: 296
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From: New York
2003 E500
Tax/cash question about trading in and then leasing new
OK, here's a question about transitioning from financing to leasing.
Got a car that's 3 1/2 yrs old, only 18k on it (the next car will definitely be driven more), and as a result I'm well right side up on the loan, owing probably around 13k with a private sale value of about 35k.
When you /purchase/ new, the value of the trade-in reduces the taxable amount of the new vehicle purchase price.
How does this work for right-side-up trade ins when the next vehicle is leased?
I would imagine you would recommend taking out the cash and putting basically $0 down into the lease.
So then is the seller (me) still getting an offset credit of some taxes into the lease (New York State), or is the seller likely to have to collect from the dealer the sales tax on the purchase by the dealer of the used car (the trade in) ?
Thoughts?
Got a car that's 3 1/2 yrs old, only 18k on it (the next car will definitely be driven more), and as a result I'm well right side up on the loan, owing probably around 13k with a private sale value of about 35k.
When you /purchase/ new, the value of the trade-in reduces the taxable amount of the new vehicle purchase price.
How does this work for right-side-up trade ins when the next vehicle is leased?
I would imagine you would recommend taking out the cash and putting basically $0 down into the lease.
So then is the seller (me) still getting an offset credit of some taxes into the lease (New York State), or is the seller likely to have to collect from the dealer the sales tax on the purchase by the dealer of the used car (the trade in) ?
Thoughts?
Former Vendor of MBWorld
Joined: Jan 2005
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From: Cincinnati, OH
If the new vehicle is $50K and your trade is worth $35K, then you would be taxed on the difference, or $15K. You could then walk away with a check for the equity.
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Senior Member
Joined: Jan 2006
Posts: 386
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From: Jupiter, Florida
2005 E55, 2004 E55(sold), 2001 Viper GTS, 2006 Viper VOI9, 1994 ZR-1 Corvette 2009 Viper ACR,
Buying/Leasing, Positive or Negative Equity... Neither matter in regard to "what is taxable". It all comes down to what the dealer is giving (or showing) you in trade, and what you (or the leasing company) is buying the new car for.... The difference is taxable, period.....
Now, of course your payoff will be different if you leased, the tax on the residual will be due if you trade it in, right?
If you are lucky enought to have equity, your walking away with a check.... If you have negative equity, you'll have put extra down and/or load up the cap cost to the maximun allowed...
Now, of course your payoff will be different if you leased, the tax on the residual will be due if you trade it in, right?
If you are lucky enought to have equity, your walking away with a check.... If you have negative equity, you'll have put extra down and/or load up the cap cost to the maximun allowed...
