Quote:
Originally Posted by champignon
It sounds like used/new car buying in Idaho and Arizona are polar opposites. If you can buy a used PP car in AZ, and pay no sales tax to register it, this obviously encourages people to sell their used cars privately. Your sales tax is close to 9%, I think I read in another thread.
In Idaho, you have to pay sales tax on new and used cars regardless of who you bought them from, at a rate of 6%. On the other hand, if you trade in a car to a dealer in the process of buying a car from a dealer, you only pay our 6% sales tax on the DIFFERENCE between the value of the trade in and the price of the car you are buying. So to take a current example, I got about $20K trade in value on my 135i Coupe, that I have already traded in towards the M2 I'll be receiving in a couple of months. So, instead of paying the sales tax on ~$55K, I'll be paying it on $35K.
This obviously encourages people in ID to trade their used cars into a dealer, and it encourages the dealers to pay less for trade ins than they would pay otherwise, since they know that they have the customers who have a trade in by the balls.
My interpretation of all of this is that the car dealers have better lobbyists in Idaho than they do in Arizona; In Idaho, you have an incentive to trade in your used car, which severely limits and hurts the PP used car market. In Arizona, you have the exact opposite!
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True, except that AZ also only charges you sales tax on the difference. Most people I know would rather take $20k on trade and save $1,800 in taxes than go through the hassle of selling the car privately for $25,000. Most people who sell their nicer cars privately are aware of the no-sales-tax-on-private-sales thing so they price their cars higher and when you talk price with them or offer them bluebook, they respond with, 'yes, but you are saving $3-4k on taxes.'
I think in CA and a few other states don't offer the credit against sales tax from your trade, terrible.