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      01-29-2008, 10:53 AM   #1
TheJackal
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NJ Tax question -- avoiding double tax

Any way to avoid double tax in NJ? My lease is almost up. My bro-in-law wants my car. If I buy it out, I pay NJ sales tax. If he buys from me, he pays NJ sales tax. I know in States like CA, if the transactions are within 10 days then there is no double tax. What are the LEGAL ways to avoid this double tax scenario in NJ. Not looking to do anything shady here.

Last edited by TheJackal; 01-29-2008 at 11:47 AM.
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      01-29-2008, 11:34 AM   #2
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Quote:
Originally Posted by TheJackal View Post
Any way to avoid double tax in NJ? My lease is almost up. My bro-in-law wants my car. If I buy it out, I pay NJ sales tax. If he buys from me, he pays NJ sales tax. I know in States like CA, if the transactions are within 10 days then there is no double tax. What are the LEGAL ways to avoid this double tax scenario in NJ. Not looking to do anything shady here.
You want to avoid paying double taxes but dont want to do anything "shady"?
Some might consider this shady but its done all the time, when you sell your car privately just list the sale price as $0 or some other low dollar amount...
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      01-29-2008, 11:44 AM   #3
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Originally Posted by EastCoast335i View Post
You want to avoid paying double taxes but dont want to do anything "shady"?
Some might consider this shady but its done all the time, when you sell your car privately just list the sale price as $0 or some other low dollar amount...
Yes, I am sure there are legal ways to accomplish this similar to the way it's done in CA. The net result is my family member is buying the car. He is willing to pay tax on it. I am not willing to lose money on the arrangement.

I believe NJ closed that loophole. I think tax is now calculated based on the value of the car, not the selling price. Therefore, even a $0 sale does not work.
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      01-29-2008, 11:51 AM   #4
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By the car and and give the car as a gift or sell it to him for $1.00
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      01-29-2008, 12:02 PM   #5
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I found this out from doing some quick research. A dealership does not pay tax on a trade-in. I can take my car to a dealership, trade it in, they pay the payoff to the lease company (no tax), they sell the car to my bro-in law with a small markup for doing the paperwork, he pays tax on his purchase. All perfectly legal and only he pays tax. Now I just need to find a dealership willing to help.
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      01-29-2008, 01:03 PM   #6
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Check out this link

http://www.leasecompare.com/lcforums...6&t=422&p=1283

Tarry talks about leasecompare offering to serve as the middleman for $300.

Let us know if it's legit.
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      01-29-2008, 01:13 PM   #7
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Originally Posted by wadgras44 View Post
Check out this link

http://www.leasecompare.com/lcforums...6&t=422&p=1283

Tarry talks about leasecompare offering to serve as the middleman for $300.

Let us know if it's legit.
They do not offer this service anymore. Sounds like they got screwed once or twice. Everything was done throught the mail. They never even saw the car. I think a local (used maybe?) car dealership might be willing to do this for a few hundred.
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      01-30-2008, 04:02 AM   #8
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Quote:
Originally Posted by TheJackal View Post
I found this out from doing some quick research. A dealership does not pay tax on a trade-in. I can take my car to a dealership, trade it in, they pay the payoff to the lease company (no tax), they sell the car to my bro-in law with a small markup for doing the paperwork, he pays tax on his purchase. All perfectly legal and only he pays tax. Now I just need to find a dealership willing to help.
thats stupid. the markup price from the dealer plus ur brother-in-law paying the tax its like the same as double tax?! (am i wrong?)

cant u just transfer the title? for example: if my dad wants to give his car to me... i dun think i will have to pay the tax twice
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      01-30-2008, 06:36 AM   #9
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Quote:
Originally Posted by TheJackal View Post
I found this out from doing some quick research. A dealership does not pay tax on a trade-in. I can take my car to a dealership, trade it in, they pay the payoff to the lease company (no tax), they sell the car to my bro-in law with a small markup for doing the paperwork, he pays tax on his purchase. All perfectly legal and only he pays tax. Now I just need to find a dealership willing to help.

You benefit on the trade because they do a transfter tax meaning if your old car was purchased for lets say 20K and you paid $1670.00 in tax for that car, then go and and trade it in and buy another car from the trade in dealer and that was 30K you only pay the difference in tax for the extra 10K.
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      01-30-2008, 08:22 AM   #10
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Quote:
Originally Posted by karliejai View Post
thats stupid. the markup price from the dealer plus ur brother-in-law paying the tax its like the same as double tax?! (am i wrong?)


Yes you are wrong. Dealerships charge a few hundred dollars for this services. Tax on a $25000 car is $1750.

Example 1 - double tax
I buyout car for $25000
I pay $26750 including tax
My bro-in-law needs to buy for $26750 form me so I don't lose money on the deal
He needs to pay 28622.50 including tax.
I pay tax, he pays tax (he even pays tax on my tax), hence double tax.

Example 2 - dealership
I trade my car in a at a dealership for $25000
They pay payoff the car at the buyout of $25000.
THEY DO NOT NEED TO PAY TAX
The sell the car to my bro-in-law for $25,500 and make $500 on the deal
He pays $27285 including the tax
savings of $1337.50


Quote:
Originally Posted by karliejai View Post
cant u just transfer the title? for example: if my dad wants to give his car to me... i dun think i will have to pay the tax twice
Yes, if I want to give as a 'gift' then it can be transferred at $0. But I don't wantto give it to him for $0 because then I'd be out $25K. If I give as a gift and then accept $25K for it then that might be interpreted as tax fraud.
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