Quote:
Originally Posted by Magic-Man
What tax breaks? I've never gotten a tax break trading a car in.
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Depends on your state. In MD, for example, you only pay sales tax on the difference between the value of your trade and the cost of your new car if done in one transaction.
MD tax is 6%, so if I trade my car in for $30k and buy a new car for $40k, I only pay the 6% tax on the $10k. If I sold my car privately (or to Carmax or to another dealer) then I'd pay tax on the full $40k. Accordingly, I'd have to sell my car for $1800 more privately in order to break even.
Many other states are similar.