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Obviously, the tax thing depends where you live.


Here, the income tax side doesn't enter into it buying and selling personal vehicles.


But 'here', the sales tax side is a BIG deal. (the call it a goods and services tax)

This tax is 13% of the 'difference' in the deal.   (Selling price of new one - value for trade in = difference;, then difference + 13% tax is the amount to be paid by cash/loan/lease/whatever)


This means that if the old vehicle is sold privately it is necessary to get 13% more than the trade-in offer in order to break even.



Trade in and get $40k for a trade in. 

To break even in a private sale it would be necessary to get $40,000 x 1.13, or $45,200 from the private buyer. 


Is it possible to get more privately -- well yes.

Will you be money ahead if in an area that has sales tax on the difference?  That's not clear.

Do the dealers know this an squeeze you on the value offered -- well, yes to that one too.   



The buyer in a private deal will have to pay the tax at the licensing office in order to get plates for it.  They now charge the tax based on their values for the model/year.  Makes it so seller and buyer can't have a 'low' invoice to reduce the tax amount.


Best to understand the tax implications --- in the area where the deal will be taxed and licensed.




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