Legally avoiding California Sales Tax
I've mentioned in a couple threads that I am looking at a Newmar Baystar. Unfortunately the actual price is coming in ~35K lower than MSRP. From what I understand California charges sales tax on MSRP ...
Forum Discussion
toedtoes wrote:darsben1 wrote:RognBon wrote:
I don't know where you got your information, but California charges sales tax on the actual sales price, not the msrp.
But any trade is not deducted from sale price
So a $250,000 Rv
with a
$100,000 Trade
difference
$150,000
but tax is on $250,000
I don't understand why this would be considered paying taxes on more than you paid for the RV? The RV cost $250,000.
Person A buys the RV and pays cash for the total $250,000. They are taxed on the $250,000.
Person B buys the RV and pays $150,000 cash and trades in their old RV for the remaining $100,000. They are taxed on the $250,000.
Why should person B pay less in taxes than person A?
It's triple taxation. The original owner paid tax on the purchase price. He/she didn't get the tax on the trade in value back when he sold it, so that tax on the trade in has already been paid.
You pay tax on the purchase price of the new rig and whoever buys the trade in pays tax on that. So if you pay the tax on the purchase price rather than what you paid, you're taxed on that $100k and the next buyer of your trade in also pays tax on $100k. That means that the tax on that $100k value of the original rig has been paid 3 times. It's quite the racket.
