TX Sales Tax - Federal Deduction - New Car

[axle hongsnort]

So I am cranking through my taxes and realize there is a government table to calculate this state sales tax deduction, but you are allowed to add additonal amounts such as the purchase of a car.

We got a pre-owned car this year and the total financed amount was $23,584, but the sales tax amount listed on the contract is only $896 which seems low.

Is there a different rate on car purchases i.e., 6.25% (sales tax floor) of $23,584 is $1,474?

 

[Blain]

Did you have a trade-in?

 

[axle hongsnort]

Yes, net of the trade in we financed $23,854. Does that change things?

 

[oak forest horn]

Anything additional, (extended warrenty, title, licenses, fees) would not be taxable items. So your purchase price on your pre-owned vehicle is (sale price-trade in price)=$14304. Multiply that by 6.25% and you get $894 in sales tax. That is the only way they can properly account for the charges. Hope that helps.

 

[Luke Duke]

You don't get taxed on the trade-in credit.

 

[madscientist]

you lost me. i bought a used suv for around $18K, traded in my old one. got $4K for the old one but owed $8K so my loan went up by the 4K neg equity to cover it. is that part of the sales price that i get taxed on?

 

[mishatx]

You were taxed on the net of the new car minus your trade (18K-4K=14K). The negative equity rolled in you were not taxed on - that wasn't part of the sale of the car, it was money loaned to you to cover the money you borrowed to buy your last car.