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Tax credit with trade in

champs9900champs9900 Posts: 14
edited July 2015 in General
I am trading in my financed vehicle and am going to lease. This is in NJ. How does the tax credit work?

If I am being offered 30,000 for my trade in and am leasing a car with a negotiated price of 50,000 but a depreciation of 20,000, how does that work? On a lease, NJ only taxes the monthly payment... Not the full price of the vehicle. As far as I'm concerned, I should not have to pay any tax on my monthly payment and should still have extra money left over due to the difference of my trade in value and depreciation value.

Please advise. Thanks.

Comments

  • kyfdxkyfdx Posts: 120,516

    I am trading in my financed vehicle and am going to lease. This is in NJ. How does the tax credit work?

    If I am being offered 30,000 for my trade in and am leasing a car with a negotiated price of 50,000 but a depreciation of 20,000, how does that work? On a lease, NJ only taxes the monthly payment... Not the full price of the vehicle. As far as I'm concerned, I should not have to pay any tax on my monthly payment and should still have extra money left over due to the difference of my trade in value and depreciation value.

    Please advise. Thanks.

    NJ taxes the sum of the monthly payments, and collects the money upfront. Whether you can take a sales tax credit for your trade-in on a vehicle being sold to the bank is another matter. I'm not sure of NJ tax statutes on that.

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