California tax benefit for trade-in - what's the %?

[rroonnbb]

Trying to decide on whether I trade in my 2012 ModelS (when I take delivery of the Y) or just sell it to Carmax or something.

I've also seen the discussions on Tesla potentially matching Carmax offers for trade-in value so I'll be attempting that.

But wanted to make sure I understand the tax implications (in CA) for doing a trade-in of the old car to Tesla. It basically changes the tax you pay on the transaction to be (CA Tax %)*(NewCarPrice-TradeInPrice) yes? And what's the CA tax number? Just the regular 7.5%? Do you also potentially get hit with any city/local taxes? (I'll be pickiing up in Marina Del Rey, CA).

 

[patrick40363]

There is no tax benefit for trading your car in.

 

[frankvb]

Sales tax is based on the registration address of the vehicle (seems 9.5% for Hermosa Beach...). Indeed in CA there is no tax benefits for trading in your car.

Hermosa Beach, California Sales Tax Rate - Avalara

 

[Watts_Up]

There is no tax benefit for trading your car in.

Sales and use taxes in California

Vehicle purchases are taxed based on the city and county in which the purchaser registers the vehicle,
and not on the county in which the vehicle is purchased.​

California statewide sales tax on new & used vehicles is 7.25%. (Plus additional county sales taxes)

But wanted to make sure I understand the tax implications (in CA) for doing a trade-in of the old car to Tesla.

It basically changes the tax you pay on the transaction to be

(CA Tax %)*(NewCarPrice-TradeInPrice) yes?

And what's the CA tax number?

Just the regular 7.5%? Do you also potentially get hit with any city/local taxes?

I'll be pickiing up in Marina Del Rey, CA).

I don't believe that you formula can be applied in California.

You will pay the CA Sales taxes based on your new FULL car value.

The used car owner will then pay the CA Sales taxes based on the vehicle's market value (unless this is a gift or inheritance)

 

[cwerdna]

There is no tax benefit for trading your car in.

Correct. Trading in a car does NOT help on sales tax for purchase of a new car in California.

What New Car Fees Should You Pay? | Edmunds has a table showing the states where it helps and doesn't help. Since I grew up in CA, I never even heard of it helping until I moved to WA. I don't live in WA any longer.

 

[jjrandorin]

Trying to decide on whether I trade in my 2012 ModelS (when I take delivery of the Y) or just sell it to Carmax or something.

I've also seen the discussions on Tesla potentially matching Carmax offers for trade-in value so I'll be attempting that.

But wanted to make sure I understand the tax implications (in CA) for doing a trade-in of the old car to Tesla. It basically changes the tax you pay on the transaction to be (CA Tax %)*(NewCarPrice-TradeInPrice) yes? And what's the CA tax number? Just the regular 7.5%? Do you also potentially get hit with any city/local taxes? (I'll be pickiing up in Marina Del Rey, CA).

You must have just got to california recently, or never purchased a car here. As others stated, you pay the local tax rate of where YOU live, not where the car is picked up. You do not pay "7.25%" you pay the same tax rate you pay on every other taxable good, which the link someone posted shows as 9.5%. You are not avoiding that tax no matter where you buy the car.

I believe there are even limits on "gift" cars so its not like you could have a relative in another state buy the car for you, then "give" it to you.

No tax trade in credit, and no registration credit either. If you just paid registration on your old car 1 month ago, you are still paying brand new 12 month registration on the new one.

 

[Tensorflow]

You must have just got to california recently, or never purchased a car here. As others stated, you pay the local tax rate of where YOU live, not where the car is picked up. You do not pay "7.25%" you pay the same tax rate you pay on every other taxable good, which the link someone posted shows as 9.5%. You are not avoiding that tax no matter where you buy the car.

I believe there are even limits on "gift" cars so its not like you could have a relative in another state buy the car for you, then "give" it to you.

No tax trade in credit, and no registration credit either. If you just paid registration on your old car 1 month ago, you are still paying brand new 12 month registration on the new one.

This is correct. The sales tax on my Tesla was exactly 9.5% of the total price which includes destination fee and order fee.

 

[Charles R]

You must have just got to california recently, or never purchased a car here. As others stated, you pay the local tax rate of where YOU live, not where the car is picked up. You do not pay "7.25%" you pay the same tax rate you pay on every other taxable good, which the link someone posted shows as 9.5%. You are not avoiding that tax no matter where you buy the car.

I believe there are even limits on "gift" cars so its not like you could have a relative in another state buy the car for you, then "give" it to you.

No tax trade in credit, and no registration credit either. If you just paid registration on your old car 1 month ago, you are still paying brand new 12 month registration on the new one.

IIRC, the DMV will cut you a check for the partial year refund.

 

[jjrandorin]

IIRC, the DMV will cut you a check for the partial year refund.

I was unaware of that. When I look at CA DMVs site right now (this morning 06/27/2022), the refund reasons do not seem to include "I paid registration before I sold my car and want a partial refund" or any such thing.

The reasons they give they will allow a refund are:

=============================================

Payments & Refunds - California DMV

DMV issues refunds in cases where you accidentally paid the wrong fee, or when a fee wasn’t required but you paid one.

www.dmv.ca.gov

Refunds​

You may request a refund of fees and/or penalties that are excessive, assessed in error, or not legally due as provided under CVC §42231 and/or CRTC §10901.

The following circumstances may qualify you for a refund of fees paid:

• The renewal fees were paid after the vehicle was sold.
• The vehicle was wrecked, junked, salvaged, or stolen before the first day of the new registration period.
• You are nonresident military personnel or a nonresident spouse and paid the vehicle license fee in error.
• The vehicle left California before the first day of the new registration period.
• You decide before the first day of the new registration period that the vehicle will not be operated and file a Planned Nonoperation Certification (REG 102) form. The planned nonoperation (PNO) fee will be deducted from your refund.

==========================================

None of those reasons cover 'I paid registration, then sold the car". If they do refund in the "I paid for registration, then sold the car" situation I would love a link to how to do that, as I paid for registration in Dec of Jan of this year for a car I sold in March, which would be 10 months of additional registration paid.

 

[howardnj]

You might want to consider moving to New Jersey?
Not only is there no sales tax on electric vehicles, in New Jersey, but my local utility NJ PSE&G qualified me for a $1500 credit on my electric bill for the BTM installation costs. The Tesla HPWC is already in my garage waiting for my vehicle

 

[Tensorflow]

You might want to consider moving to New Jersey?
Not only is there no sales tax on electric vehicles, in New Jersey, but my local utility NJ PSE&G qualified me for a $1500 credit on my electric bill for the BTM installation costs. The Tesla HPWC is already in my garage waiting for my vehicle

Zero tax on EVs? I should’ve moved to NJ for a month just to pick up my Tesla.