Insurance money and sales tax.
#1
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Insurance money and sales tax.
If a car is totaled out and the insurance gives you lets say 20k.
You buy a 20k car to replace it do you have to pay sales tax on the
replacement car?
If so that would be close to $1,400 out of pocket you need to make up.
I was just wondering my car is fine, I saw a post that made me think about this.
Thanks,
Paul G.
You buy a 20k car to replace it do you have to pay sales tax on the
replacement car?
If so that would be close to $1,400 out of pocket you need to make up.
I was just wondering my car is fine, I saw a post that made me think about this.
Thanks,
Paul G.
#2
Drifting
In Missouri, If you replace a car thats been totaled, or that you have sold privately, within I believe it's 6 months, then there is a form you complete to get back part of the sales tax you paid on the replacement car. You should be able to get the form at a license office or on the internet from the state DMV. Call the license office. They can tell you if this applies in your state and what the guidelines are.
Last edited by PierEagle; 02-05-2007 at 01:10 PM.
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The sales tax you pay is on the difference between what your old car was worth/sold for and the price of the new car. If no difference, you shouldn't have to pay any tax. A local Motor Vehicle Office should be able to verify exactly what that state's policy is.
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If the insurance co totals your car and the they determine the replacement value is $20K they should add the sales tax and any other acquisition costs to that. Then they will take off you deductible and pay you the balance. Don't let them tell you different.
The other method about paying the difference people have mentioned does not apply. That's only works in some States where you are trading in a vehicle and you pay tax on the added value.
The other method about paying the difference people have mentioned does not apply. That's only works in some States where you are trading in a vehicle and you pay tax on the added value.
Last edited by Vega$Vette; 02-05-2007 at 01:33 PM.
#5
Your question got me thinking and I called one of the "P&C" agents that work for me and asked them what the answer was. The answer was NO, they will not pay the sales tax. Insurance companies are only required to pay you the ACV (actual cash value) for your loss. You could take that money and buy anything that you wanted.
Here is something else I had never thought about, but if you pay MORE than what a car is worth, ie "dealer mark up," you could have a problem if you had a total loss. Insurance would pay what the NADA, or Kelly blue book says the value is, NOT what the dealer charged you over the MSRP. Keep this in mind as the new "Blue Devil" hits the dealers and you pay 50k to 100k over the MSRP. If you have a loss the insurance co. will pay value not what you may owe. That could be a very hard leason to learn.
Here is something else I had never thought about, but if you pay MORE than what a car is worth, ie "dealer mark up," you could have a problem if you had a total loss. Insurance would pay what the NADA, or Kelly blue book says the value is, NOT what the dealer charged you over the MSRP. Keep this in mind as the new "Blue Devil" hits the dealers and you pay 50k to 100k over the MSRP. If you have a loss the insurance co. will pay value not what you may owe. That could be a very hard leason to learn.
#7
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When I totaled a Ford Explorer a couple of years ago. AAA paid me replacement value plus sales tax. They insisted on giving me $8500 + tax even when I told them I only paid $6800 for it and could replace it for $6500. Said they should not benifit because I got a good deal. Then the guy says have you done any recent work on the vehicle. I told him I put new shocks and brake pads on a couple of months ago and he gave me another $400. ended up with a check for almost $9K.
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Your question got me thinking and I called one of the "P&C" agents that work for me and asked them what the answer was. The answer was NO, they will not pay the sales tax. Insurance companies are only required to pay you the ACV (actual cash value) for your loss. You could take that money and buy anything that you wanted.
Here is something else I had never thought about, but if you pay MORE than what a car is worth, ie "dealer mark up," you could have a problem if you had a total loss. Insurance would pay what the NADA, or Kelly blue book says the value is, NOT what the dealer charged you over the MSRP. Keep this in mind as the new "Blue Devil" hits the dealers and you pay 50k to 100k over the MSRP. If you have a loss the insurance co. will pay value not what you may owe. That could be a very hard leason to learn.
Here is something else I had never thought about, but if you pay MORE than what a car is worth, ie "dealer mark up," you could have a problem if you had a total loss. Insurance would pay what the NADA, or Kelly blue book says the value is, NOT what the dealer charged you over the MSRP. Keep this in mind as the new "Blue Devil" hits the dealers and you pay 50k to 100k over the MSRP. If you have a loss the insurance co. will pay value not what you may owe. That could be a very hard leason to learn.
#10
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Thanks for the info., and glad some people found out too what to watch out for.
Paul G.
Paul G.
#11
Team Owner
If a car is totaled out and the insurance gives you lets say 20k.
You buy a 20k car to replace it do you have to pay sales tax on the
replacement car?
If so that would be close to $1,400 out of pocket you need to make up.
I was just wondering my car is fine, I saw a post that made me think about this.
Thanks,
Paul G.
You buy a 20k car to replace it do you have to pay sales tax on the
replacement car?
If so that would be close to $1,400 out of pocket you need to make up.
I was just wondering my car is fine, I saw a post that made me think about this.
Thanks,
Paul G.
#12
Team Owner
If the insurance co totals your car and the they determine the replacement value is $20K they should add the sales tax and any other acquisition costs to that. Then they will take off you deductible and pay you the balance. Don't let them tell you different.
The other method about paying the difference people have mentioned does not apply. That's only works in some States where you are trading in a vehicle and you pay tax on the added value.
The other method about paying the difference people have mentioned does not apply. That's only works in some States where you are trading in a vehicle and you pay tax on the added value.
#13
Drifting
Cheers
Last edited by PierEagle; 02-06-2007 at 01:14 AM.