Tax Question on a Trade
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Joined: Feb 2015
Posts: 97
Likes: 3
From: Central Pennsyltucky PA
Race Director
Joined: Sep 2001
Posts: 10,560
Likes: 439
From: Wellington, FL
St. Jude Donor '11 thru '25
It's probably best to contact the PA DMV to see what the law is and if there is a way of avoiding the tax. Perhaps it's possible to go to the DMV with the other party or produce documents to validate the trade and if he's from PA, they could do the title swaps at the same time verifying the transaction, hopefully eliminating tax consequencies.
Keep us posted.
Team Owner
Joined: Jul 2006
Posts: 22,202
Likes: 4,187
From: Kannapolis NC
In NC, you pay the tax on the value of the vehicle you are getting, regardless of trade in, unless by a licensed dealer. If you trade with a dealer, you only pay tax on difference. From an individual, you pay full value based on valuation tables.
Save yourself a lot of fretting and bad information and Google your DMV laws in your state and you'll get exact and correct answers, not answers based on opinions or various state laws. If you don't care to research, stop by your local DMV and ask an employee. You'll wish you had Googled.
Save yourself a lot of fretting and bad information and Google your DMV laws in your state and you'll get exact and correct answers, not answers based on opinions or various state laws. If you don't care to research, stop by your local DMV and ask an employee. You'll wish you had Googled.
Race Director
Joined: Oct 2000
Posts: 12,687
Likes: 3,139
From: Shamong, NJ
Scroll down to the end of the third page in the link below, for how PA calculates sales tax on a trade. Normally, if no cash is exchanged, I would think that there shouldn't be any tax due.
PA, like most states, does have a vehicle understated value provision, in their tax law. This allows them to access additional tax, if they determine that you "under paid" for a vehicle. What this means, is if they determine that the 75 is worth $10,000, and the 87 is worth $5,000, they will tax you on the difference. There is an appeal process, but it might be hard to win, when you're dealing with a trade?
http://www.dmv.state.pa.us/pdotforms...fs-buysell.pdf
If I remember right, NC has a personal property tax. PA doesn't. NC residents pay an annual tax, based on the value of the vehicle. In PA you pay a one time 6 percent sales tax, on the actual cash paid for the vehicle. If there is a trade involved, you only pay tax on the cash difference paid, and from what I've seen, the tax law doesn't specify that a trade most involve a dealer. The law only refers to the parties involved as seller(s).
PA, like most states, does have a vehicle understated value provision, in their tax law. This allows them to access additional tax, if they determine that you "under paid" for a vehicle. What this means, is if they determine that the 75 is worth $10,000, and the 87 is worth $5,000, they will tax you on the difference. There is an appeal process, but it might be hard to win, when you're dealing with a trade?
http://www.dmv.state.pa.us/pdotforms...fs-buysell.pdf
If I remember right, NC has a personal property tax. PA doesn't. NC residents pay an annual tax, based on the value of the vehicle. In PA you pay a one time 6 percent sales tax, on the actual cash paid for the vehicle. If there is a trade involved, you only pay tax on the cash difference paid, and from what I've seen, the tax law doesn't specify that a trade most involve a dealer. The law only refers to the parties involved as seller(s).
Burning Brakes
Joined: Sep 2005
Posts: 1,139
Likes: 109
From: B'ham Alabama
Sales tax is only applied to cash differences paid. This applies in all 50 states. A sales tax only applies to cash spent. If you do and even trade....you have already paid the sales tax on the value of the car you're trading. The state does not tax you again in the value of your trade in.
I am certain, this is the same in all 50 states. No sales tax on even trades.
Now, you will pay a road and use tax when you license the car for the upcoming year. This should also be prorated based on the road and use tax already paid on your current car that you traded. Most people call this the tag cost or registration cost.
I am certain, this is the same in all 50 states. No sales tax on even trades.
Now, you will pay a road and use tax when you license the car for the upcoming year. This should also be prorated based on the road and use tax already paid on your current car that you traded. Most people call this the tag cost or registration cost.
Team Owner
Joined: Jul 2006
Posts: 22,202
Likes: 4,187
From: Kannapolis NC
Scroll down to the end of the third page in the link below, for how PA calculates sales tax on a trade. Normally, if no cash is exchanged, I would think that there shouldn't be any tax due.
PA, like most states, does have a vehicle understated value provision, in their tax law. This allows them to access additional tax, if they determine that you "under paid" for a vehicle. What this means, is if they determine that the 75 is worth $10,000, and the 87 is worth $5,000, they will tax you on the difference. There is an appeal process, but it might be hard to win, when you're dealing with a trade?
http://www.dmv.state.pa.us/pdotforms...fs-buysell.pdf
If I remember right, NC has a personal property tax. PA doesn't. NC residents pay an annual tax, based on the value of the vehicle. In PA you pay a one time 6 percent sales tax, on the actual cash paid for the vehicle. If there is a trade involved, you only pay tax on the cash difference paid, and from what I've seen, the tax law doesn't specify that a trade most involve a dealer. The law only refers to the parties involved as seller(s).
PA, like most states, does have a vehicle understated value provision, in their tax law. This allows them to access additional tax, if they determine that you "under paid" for a vehicle. What this means, is if they determine that the 75 is worth $10,000, and the 87 is worth $5,000, they will tax you on the difference. There is an appeal process, but it might be hard to win, when you're dealing with a trade?
http://www.dmv.state.pa.us/pdotforms...fs-buysell.pdf
If I remember right, NC has a personal property tax. PA doesn't. NC residents pay an annual tax, based on the value of the vehicle. In PA you pay a one time 6 percent sales tax, on the actual cash paid for the vehicle. If there is a trade involved, you only pay tax on the cash difference paid, and from what I've seen, the tax law doesn't specify that a trade most involve a dealer. The law only refers to the parties involved as seller(s).
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Team Owner
Joined: Jul 2006
Posts: 22,202
Likes: 4,187
From: Kannapolis NC
Sales tax is only applied to cash differences paid. This applies in all 50 states. A sales tax only applies to cash spent. If you do and even trade....you have already paid the sales tax on the value of the car you're trading. The state does not tax you again in the value of your trade in.
I am certain, this is the same in all 50 states. No sales tax on even trades.
Now, you will pay a road and use tax when you license the car for the upcoming year. This should also be prorated based on the road and use tax already paid on your current car that you traded. Most people call this the tag cost or registration cost.
I am certain, this is the same in all 50 states. No sales tax on even trades.
Now, you will pay a road and use tax when you license the car for the upcoming year. This should also be prorated based on the road and use tax already paid on your current car that you traded. Most people call this the tag cost or registration cost.
Last edited by 65GGvert; Aug 2, 2015 at 06:41 AM.
Melting Slicks
Joined: Oct 2003
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From: Chapel Hill NC
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To the OP, the answer, based on my experience depends on which day you go to DMV and which employee you speak with. I would google the question and then go to the DMV with something in writing as a back up. To 65GGvert, of the seven states I have lived in, NC DMV is the least "user" friendly.
Team Owner
Joined: Jul 2006
Posts: 22,202
Likes: 4,187
From: Kannapolis NC
To the OP, the answer, based on my experience depends on which day you go to DMV and which employee you speak with. I would google the question and then go to the DMV with something in writing as a back up. To 65GGvert, of the seven states I have lived in, NC DMV is the least "user" friendly.
Team Owner
Joined: Jun 2000
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From: Southbound
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