Sales Tax Question

[Zasker1]

For those of you good with numbers, is the Assessed Sales tax based on the true MSRP of the vehicle, or is based on the "SALE PRICE" of the vehicle.

 

 

My friend is about to pull the trigger on a 2015 GMC Yukon XL, the MSRP is 62k and he has the dealer down to 54k, but they say the tax will be on the 62k.

 

This is in Arizona btw.

 

Whats the right way to calculate the tax?

[LongrangeLauber]

Sale price I'm pretty sure

[raym0016]

Depends on the state. In MN it is sales price minus trade value.

[Chevor]

GOV goes by value of vehicle. I have run into this in MI.

[Rawyzf]

Depends on the state. In MN it is sales price minus trade value.

Exactly what I was going to say.

 

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[Zasker1]

Thanks for the help, I have been trying to coach him on GAP, Hold Back, Ext Warr, etc but I think he has new car fever.

 

I got his wife calling the AZ state Attorney office to get clarification

[ncorry]

In Arkansas, it's based on the sales price less trade in BUT factory rebates to the dealer are included. I bought mine at $40,000, - that is the amount I paid out of pocket with no trade in. But, the dealer got a $3,000 rebate from GM, so I paid sales tax on $43,000.

[Norcalace]

It would seem somewhat illegal to tax a person on money that didn't come out of their pocket. Besides it doesn't pass the common sense test.

[redwngr]

In Ontario, used vehicles that are sold privately must pay tax on the governments version of the vehicles value.

 

Apparently they felt to many cash deals were being done with 'bill of sale' numbers that were below the amount of cash that changed hands.

[tnchevy]

In Arkansas, it's based on the sales price less trade in BUT factory rebates to the dealer are included. I bought mine at $40,000, - that is the amount I paid out of pocket with no trade in. But, the dealer got a $3,000 rebate from GM, so I paid sales tax on $43,000.

Same thing in TN. TN has a 9% sales tax (plus what local and county governments put on) but the charge a little less than that around 7% on vehicles.

[Cosmic Charlie]

Here in Mass for sales tax, it's the actual price you spent (and the trade if any will be deducted from the price you paid) ... And rebates etc ... are NOT included as taxable

 

The state may value your new to you USED car as what the book value is (if your sale price makes NO sense) some flexibility there ...

 

NH has NO sales tax

[Chevor]

Just plate it in Montana. No sales tax.

[Dedz]

In AZ, sales tax is levied on the sale price, minus the value of the trade-in. The annual vehicle tags are assessed on the MSRP.

[WildWilt15]

Michigan you pay tax on the full MSRP it is the most ridiculous logic... How can you tax people on money they didn't spend....

[toro1966]

I'll give the same answer most have given - it depends, but as someone who has lived in a lot of states and registered vehicles in several, that is the truth. Each state is different. That said, what I have found to be the most common method - even in CA, is that the tax paid is based on the SALE price of the vehicle. Here's an example, the vehicle MSRP is 62K, there are rebates that equate to 6k, and the dealer has agreed to knock an additional 2k off of and sell the vehicle to your friend for 54k. In that example, the tax would be assessed on 60k - because that is what the PRE-REBATE sales price is.

 

As others have mentioned, the above example assumes no trade. In many cases, the trade also reduces the basis for the tax. Hope that helps.