Trading in a lease car (not turning in)

[scottsins]

If you trade a car in, i.e., selling it to the same place you are buying a new car from, you only pay sales tax on the difference between the trade in price and the new car purchase price.

If the traded in car is a lease, again, not "turning it in early", but having the dealership buy it, basically, do you still get the credit off of the taxable amount?

 

[pasotex]

I am pretty sure that the answer is yes, but this is a good question.

 

[Roger]

When you own a car and you trade it in, you owe taxes on the proceeds that you received however the tax code allows you to defer this if you are using those proceeds to purchase a similar asset (a car in this case).

When you lease a car there are no proceeds that you are receiving if you just turn it in thus there is no tax.

So there is no real tax credit in either situation, the situations are different but there is little difference in the end result

 

[NickDanger]

Because you pay sales tax on how much you spend, no? Not sticker or contract sales price before credits.

 

[HornBud]

In Florida, it made no difference. We took leased cars in on trade all the time and it was never an issue. It worked exactly the same as if the car was bought.