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  1. #1
    Join Date
    Jan 2019
    Posts
    15

    Default Sales Tax Out of State Car Purchase with a Trade In. New York to Pa

    My question involves a consumer law issue in the State of: PA and NY
    Now I understand when buying a new car out of state, you are taxed on your residency, not where buy but my confusion is around trade in.
    Here in NY when you trade in car, you aren't taxed on that trade in value. You are taxed on the difference between purchase price and trade in.
    But how would that work if I were to buy/trade in at dealer in different state... Particularly PA who has slightly lower sales tax.

    Example using rough numbers here are the 2 scenarios :

    1. Buying and trading at a NY dealership here in NY where I live :If I buy a $25k car before tax and trade in a $20K car, I'll be taxed on $5k at our local sales tax rate.

    2. Buying and trading out of state in PA. Buy a $25k car before tax but trading in a $20k car. What amount will I be taxed when it is registered in NY? $5K or the full purchase price of $25k?

  2. #2
    Join Date
    Mar 2013
    Posts
    18,241

    Default Re: Sales Tax Out of State Car Purchase with a Trade In. New York to Pa

    Call a dealer in PA and ask.

    Or call the PA sales tax office.

  3. #3
    Join Date
    Sep 2010
    Posts
    19,865

    Default Re: Sales Tax Out of State Car Purchase with a Trade In. New York to Pa

    Your understanding is wrong. In nearly every state, you own tax where you take delivery of the car. It matters not where you reside. You may also owe a use or excise tax in the state you reside and your state may or may not give you credit for taxes paid to other jurisdictions. Whether the state taxes you on the full value of the newly purchased car depends on the state.

    Neither NY nor PA tax the trade-in part of the new(er) car purchase.

    So in your question #1. You owe tax on the $5K (purchase price less the trade-in FMV).

    In question #2, if the car is delivered in PA, the dealer must charge PA sales tax on the $5K. New York will want you to pay tax to them as well. They will not give credit (they do for some states, but they do not have a reciprocal agreement with PA right now)

  4. #4
    Join Date
    Jan 2019
    Posts
    15

    Default Re: Sales Tax Out of State Car Purchase with a Trade In. New York to Pa

    Good to know.. We decided against doing anything anyways. Nothing wrong with her current car, just got caught up in new car shopping, better off hanging on to what we got. But thank you! �� Good to know.

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