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Car Financing, Car Leasing
#1050 of 1081 Re: Illinois sales tax question [markag]
Dec 02, 2011 (8:12 am)
In Illinois you pay the tax for the county you buy in, not the county you reside it. This was brought home to my wife & me in September when we were car shopping as we live in the western suburbs of Chicago and one dealer was touting that they had a lower sales tax than Cook & the collar counties.
If you buy in Wisconsin there are a couple of ways to do it. If the dealer does Illinois sales often enough they may be able to charge you Illinois sales tax (not sure what rate .. maybe just the base state rate or the rate for your county) and that's the end of it. Failing that, they will be legally obligated to charge you WI sales tax. You, in turn, when you register the car in Illinois will be obligated to pay IL sales tax (all at once). You should, though I'm not sure about WI law in this regard, then be able to file a claim with the WI DMV to have your WI tax refunded.
BTW, if you change your mind & buy new and buy this year, the sales tax is deductible on your income tax.
#1051 of 1081 Re: Illinois sales tax question [fushigi]
Dec 02, 2011 (11:24 am)
Thanks for the help. That is not what I was hoping to hear as Chicago area sales tax is 7.25% instead of 6.25% where I am currently living.
I am looking for a very specific car that is no longer in production, so I won't be buying new. I'm not going to be able to take advantage of it on my tax return, but that is fine with me.
#1052 of 1081 Re: Illinois sales tax question [fushigi]
Dec 02, 2011 (11:52 am)
sorry for the double reply, but this has seemed to contradict other information I have been finding. I keep reading that you pay sales tax based on the location where you live, and not where you buy. Is that the case when buying within Illinois?
#1053 of 1081 Re: Illinois sales tax question [markag]
Dec 02, 2011 (8:37 pm)
From page 34 of http://tax.illinois.gov/Publications/Sales/STS76.PDF
Sorry for the icky cut-n-paste but note it mentions the address of the business, not the buyer.
#1054 of 1081 AZ Sales Tax
Dec 30, 2011 (3:00 am)
I just purchased a new vehicle in Maricopa County, AZ
Assume the agreed upon price was $55K; the agreed on trade in price was $15k.
Dealer calculated sales tax on new vehicle price. Shouldn't this tax be calculated on $40k instead?
(new vehicle-trade in)
#1055 of 1081 Re: AZ Sales Tax [opita1]
Dec 30, 2011 (11:16 am)
AZ is a trade in allowance state so you should only pay tax on the difference.
Did you buy or lease? Many states tax the entire value of the purchase when leasing.
#1056 of 1081 tax question - lease trade
Jan 02, 2012 (7:56 am)
I am coming off a lease and due to market conditions have equity in my car.
The lease agreement indicates my purchase price and then has the sentence. "the purchase option price does not include fees for tags, taxes or registration"
When I leased the vehicle, I did not pay tax up front, however I do pay tax each month along with my monthly payment. It makes sense to me that if i want to buy the car at the end of my lease, I would need to pay tax. this would be 6.25% of $16,000 or $1,000.
I also understand if I had originally purchased the car as opposed to leasing, I would have paid the tax up front so if I was trading it in, it would offset the new car price reducing my tax cost.
here is my question - if there is equity in the car and the dealership is buying the car, how does the tax work? Is tax payable and by whom?
For example, if they value my car at 18,000. Do I net $2,000 or am I only going to net $1,000. Is the answer different if I do the transaction to (a) reduce cap cost on my next lease or (b) take a check for the difference.
#1057 of 1081 Re: tax question - lease trade [tsxowwner]
Jan 03, 2012 (11:23 am)
In most states the title from a leased car can pass to the lessee (you) or a licensed dealer. So I could not buy your leased car - you can or you can sell / trade it to a dealer.
In most states, tax would be due if YOU purchased the car based on the buy out (at that time) price. In your example you used $16k - so that would be the taxable amount.
If a dealer buys your car, no tax is due (at this point) so if the dealer offered you $18k to buy / trade your car your net would be $2k and you could ask for a check or roll that into the next deal. I have found that Carmax offers as good / better money than local dealers if you have a clean, low mile, never wrecked car to get rid of. It is nice to car shop without a trade as well, makes things a lot simpler.
Always be sure you get the buyout price inclusive of any fees (disposal fee, etc) but excluding the taxes. This is the price a dealer would have to pay to buy the car, if you buy it you can simply add the tax to this amount yourself to figure the total. You do not need to wait until lease end either, at any point your car is worth more than the current buy out you can sell / trade and net the difference. At certain ages (like after the warranty expires) and certain mileages (like when major maintenance is due) the value can drop a good deal. Ditto market conditions like time of year (selling a convertible now, for example) and supply and demand can make not waiting until lease end a better option.
I have heard there are some lease banks that will not allow any 3rd party to buy their lease vehicles, you either buy it yourself or turn it in. These are rare, however.
#1058 of 1081 Re: tax question - lease trade [dwynne]
Jan 03, 2012 (12:10 pm)
thanks a lot for the info!
#1059 of 1081 Soon to be resident of AK, want to buy car elsewhere
Feb 01, 2012 (6:05 pm)
I am looking to buy a new car. AK doesn't have a sales tax, but they do have overpriced cars for the car I am looking for I want to buy it ENROUTE to AK and then just register it in AK when I arrive. Anyone know if that is possible?
I would really like to use the new car to drive across the US but I heard there is some kind of stipulation that you would need to register the care within 10 days of purchasing. Is that correct? I really don't want to waste money on sales tax!
To make matters more complicated, I am trying to trade my current vehicle in for the new car (old vehicle is registered in Alabama). Thoughts??