Buying a car in Ma. tax question

[skimann20]

Hey Gang, I moved here from Colorado and have a question about the law in Mass.

 

In Colorado, when you by a car with a trade in you only pay tax on the difference. So 20K on the new car, 8K trade in value you pay tax on 12K. On the other hand if you buy the car for 20K and put down 8K in cash you pay tax on the full 20K.

 

Is it the same way here in Mass? If I would have to guess, i bet it doesn't matter, i bet I'm getting taxed on the full 20k... any help would be great. thanks.

[BCP2011]

You're taxed on the difference.

[skimann20]

for both cash and trade in? or just the trade in?

[Fossil2k2]

I'm not very familiar with the tax laws your asking about, but I'd be willing to bet that it's the same as you describe in Colorado.

 

Welcome to Taxachusetts

[sk_leb]

I'm fairly certain you're correct.

 

You get that tax deduction on your trade-in because you already payed tax on that item. For a down payment, you have to pay tax on the full amount - because if you didn't and you payed cash for the entire car that would mean you'd get out tax free

 

I just bought a car in MA and they charged me tax on the retail price sans down payment.

[skimann20]

For a down payment, you have to pay tax on the full amount - because if you didn't and you payed cash for the entire car that would mean you'd get out tax free

 

Ahhhh that makes a lot of sense! thanks! I was thinking about selling my truck outright because it has a 100K transferable warranty and you know I'm not going to get squat for the warranty if I trade it in. Plus, private sales go for more than trade ins (just have to make up the difference in tax); one less thing to negotiate at the stealership . Thanks again for all that chimed in.

[Verwilderd]

Ahhhh that makes a lot of sense! thanks! I was thinking about selling my truck outright because it has a 100K transferable warranty and you know I'm not going to get squat for the warranty if I trade it in. Plus, private sales go for more than trade ins (just have to make up the difference in tax); one less thing to negotiate at the stealership . Thanks again for all that chimed in.

 

You can always see what a dealership will give you vs the hassle of trying to sell it and see which one makes more sense....you'll almost always get more for your car if you sell it yourself, but it may not be worth the trouble....just something to consider.