Trade in and sales tax

Iceman21

Iceman21

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Iceman21
I'm told that I can save a bunch of cash by in effect trading in my airplane when buying a new one.

For instance selling my airplane for 50k and buying a newer one for 110k, I could only pay sales tax on the difference of 60k.

Not 100% sure how it works. Any one have any experience?

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Iceman21 said:
I'm told that I can save a bunch of cash by in effect trading in my airplane when buying a new one.

For instance selling my airplane for 50k and buying a newer one for 110k, I could only pay sales tax on the difference of 60k.

Not 100% sure how it works. Any one have any experience?

Sent from my SAMSUNG-SM-N920A using Tapatalk
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Depends on your state tax laws. What state?
 
Sorry Illinois

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In New York, the value of anything in value traded in on a purchase of (to my knowledge) anything is not subject to sales tax provided that the seller intends to sell the thing taken in trade.

I suppose the theory is that the thing offered in trade was already taxed once when it was first purchased, and will be taxed again when it is re-sold, so the state will be getting sales tax on the same thing twice. Any more than that would be greedy.

Rich
 
Is it a trade in or two sales? Trade-I with a licensed dealer will save you sales tax, but sale to one individual and buy from another means you both pay full price sales tax. At least that's the way it was with the boats and airplanes I've bought and sold in IL.
 
Spotter626 said:
Is it a trade in or two sales? Trade-I with a licensed dealer will save you sales tax, but sale to one individual and buy from another means you both pay full price sales tax. At least that's the way it was with the boats and airplanes I've bought and sold in IL.
Click to expand...

Good point I missed that, he said he was selling his AC, in which case the buyer is responsible for that transaction, however since he didn't trade it in for his new AC he would be responsible for the full sale tax.
 
Thank for the replies, so unless I deal with a dealer I'm hosed. 7k in taxes as opposed to 3.5k it is!

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Iceman21 said:
I'm told that I can save a bunch of cash by in effect trading in my airplane when buying a new one.

For instance selling my airplane for 50k and buying a newer one for 110k, I could only pay sales tax on the difference of 60k.

Not 100% sure how it works. Any one have any experience?

Sent from my SAMSUNG-SM-N920A using Tapatalk
Click to expand...
That's the way it works in Florida. In fact, I sold my old plane through a broker and I bought my new plane through the same broker. He worked it in such a way that I was able to avoid (not evade) sales tax on the value of the trade in. That pretty much saved me the value of the sales commission.
 
I see it as a good problem to have, having to pay taxes because you bought an airplane. Now as far as the amount you have to pay? That's political so I won't go there.
 
There are consultants who specialize in aviation-related tax planning. It might be worth a call...
 
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