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TexRiv_63

Car Trade Instead of Cash Sale - Opinions?

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I have bought and sold a lot of cars with cash transactions but I have never done a car-for-car trade between private parties. I am now considering it, I know it must happen often but what about the paperwork, how are the car values determined for sales tax, capital gains, etc.? What are the positives and negatives?  I'd like opinions / advice from anyone who has done this, thanks.

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I have made trade deals before.  If it is a straight across trade I simply write on the B.O.S. "Straight trade, no monetary consideration" Worked for me. Difficult for the DMV to tax a sale where no cash trades hands. Good luck with your deal.

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In Florida we have a mechanism for giving a car away (gift) that involves no money. Each state is different so I'd suggest calling the DMV.

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I stand on the fifth amendment.

 

Somewhere in a city near you there is a street with a row of seedy, back row, used car lots. Stop at the one with an old car parked by it. A twenty will get you all the information you need.

Caution, don't wear black Oxfords or a sport jacket.

Bernie

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In Texas, they look up values in the NADA book for State tax purposes.  Of course if you car is antique plate old, they cant do that.  They still want their pound of flesh though, so they will assign it an arbitrary amount. I once traded an old Triumph for a Jaguar and I ended up paying more.

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Did a motorcycle trade once, traded a Honda for a Suzuki.  I was in PA, other fella was in NJ.  We swapped and signed titles at this house.  When I came back to PA to register it I had to pay sales tax on the "book value" to register it and get a license plate and PA title.

Nothing too tricky to it, just establishing a fair price was the only unknown to me for the deal.

 

Terry 

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For paperwork some states only have you pay tax on the difference of the trade.  In NY,  I'm pretty sure there is no way on a private sale to avoid any tax.  They want to know the value of what is traded and you pay based on that value plus any money that me be thrown in on the deal.   Pretty simple.  They have you any way you want to look at it.  I've traded cars twice.  Still wondering if I came ahead on either of those deals.  

Edited by auburnseeker (see edit history)
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Please identify the state(s) involved and if the cars are the same value or one is greater in value by state.  

If these are private sellers or commercial business involved.

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Thanks for the replies. The state is Texas, two private sellers, both living in Texas. The assumption is an even trade of cars with no cash involved. I researched this through the Texas DMV online and confirmed it at my local tax office today:

  • They do use Standard Presumptive Values to determine sales tax for cash sales on newer vehicles, those apply if they are higher than the actual price paid. (What a ripoff!)
  • SPV's DO NOT apply to vehicles 25 years old or older or to even trade vehicle swaps.
  • No sales tax is charged on even trade swaps but there is a $5.00 fee on top of the normal title and registration fees.

 

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regarding trades................. have never been offered a decent trade............... always other peoples junk.

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