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Recouping tax savings on traded in auto

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Droid1926

New member
What is the name of your state?NJ

I have a 2018 new MB that has been in the shop over 30 days as well as has been retired to dealer 5 times for different engine issues. My question is if I was to implement the lemon law I understand I would be able to collect what I paid for the car as well as any interest for the auto loan however when I bought the MB I traded in a auto with a 40k credit saving me paying the tax on that amount being I already paid that previously. Is this tax credit something I would also be able to recoup or is that just lost as it would be $2650 lost and will have to be paid to buy another new car.
 


Droid1926

New member
I already have read it but what I am asking is I didnt have to pay sales tax on the 40k that they gave me in trade as I already paid it when I bought the other car. So I only paid the sales tax from 40k -80k but now if I do a buy back I will have nothing to trade so my thinking is I would loose that 40k tax savings on the next auto I buy. I don’t want another MB after all this so trade assist isnt the answer.

Example of buying MB

Car trade was 40 k
New car was 80k
I had to only paid tax of the difference so $2640 because of trade
Sales tax is 6.625%

Now with buy back if I was to buy another 80 k car I would have to pay tax on all so $5300

I assume there is no any to recoup that 2640 as I didn’t have to pay it when I bought the new MB and didn’t pay it in the transaction and was a credit being in NJ you only pay tax on the difference of trade and new price.
 

adjusterjack

Senior Member
Read your purchase contract. Does it look like this:

$80,000 - $40,000 = $40,000 + $2650 tax = $42,640

If it does, you have already recouped the $2650 because it's money that you didn't have to pay.

Look at it this way:

If you sold your car privately for $40,000 and then bought the new car for $80,000 it would look like this:

$80,000 + $5300 tax = $85,300

By trading in your car you've already recouped $2650 because you didn't have to pay it.
 

Droid1926

New member
You are correct however now a lemon buy back and not trade in situation being I didn’t pay the extra $2650 when I bought it because I used my trade there is no way to recoup it under the lemon law. I did get wholesale on the trade of the old car but made up some of the difference because I didn’t have to pay tax on that amount so would have been better in this situation to have not traded it but who knew it would be a lemon. So the answer to the question is no there is no way to recoup that credit of tax on that trade in being I didn’t physically pay it this time and was a credit from the trade in. Thanks for helping understand it just frustrating
 

adjusterjack

Senior Member
So the answer to the question is no there is no way to recoup that credit of tax on that trade in being I didn’t physically pay it this time and was a credit from the trade in.
That's not exactly what I'm saying. What I'm saying is that you already recouped it by not having to pay it. It's like a rebate. You pay $10 for an item, send in the coupon, and three months later they send you $2. Or, you pay $8 for the item and you don't get a rebate. Did you just lose $2? Of course not. Just like you aren't losing $2650.

would have been better in this situation to have not traded it
Well, you can say that about any trade-in. You would have done better selling it privately and then dealing on just the price of the new car without giving the dealer the opportunity to juggle the figures to your detriment.
 

PayrollHRGuy

Senior Member
The buyback is no different than a trade in You will have an $80K trade in for a new 80K car. Should you choose a $90K car instead you will pay tax on $10K

This is assuming you buy a new car.
 

Droid1926

New member
But if MB buys the car back and I go buy a Porsche I no longer have that trade from when I bought the MB. Yes I didn’t have to pay tax on the MB for the first 40k because of trade but now I have no trade so now would have to pay tax on the whole price and guess MB would only pay what I paid and the credit that I didn’t have to pay is just lost. If I never bought the MB I would have been able to use the old to trade and not have to pay tax on whatever the trade would be worth. So the reason I said I lost $2650 as MB won’t pay that as part of lemon law claim as it wasn’t physically paid when bought and now I don’t have anything to trade and would have to pay on the whole. And when I said I would have done better not doing a trade in as then I would have paid all the taxes and then MB would have to pay the whole amount back under the law.
 

adjusterjack

Senior Member
You haven't lost $2650 but if you want to continue to believe that you did, you might as well accept the fact that there is nothing you can do about it.
 

PayrollHRGuy

Senior Member
I'm not sure about NJ but there is no requirement that you trade in the car to get the credit where you are getting the new car in the states that I know about. There are time limiting rules for the credit.
 

tbonesays

Junior Member
But if MB buys the car back and I go buy a Porsche I no longer have that trade from when I bought the MB. Yes I didn’t have to pay tax on the MB for the first 40k because of trade but now I have no trade so now would have to pay tax on the whole price and guess MB would only pay what I paid and the credit that I didn’t have to pay is just lost. If I never bought the MB I would have been able to use the old to trade and not have to pay tax on whatever the trade would be worth. So the reason I said I lost $2650 as MB won’t pay that as part of lemon law claim as it wasn’t physically paid when bought and now I don’t have anything to trade and would have to pay on the whole. And when I said I would have done better not doing a trade in as then I would have paid all the taxes and then MB would have to pay the whole amount back under the law.
You could have MB replace the car, trade in the replacement and save all the tax.
 
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