Sold my Prime thru Carvana

congrats on the bolt, great car! please keep us posted on your experience!

 

For a ... 2017? Advanced?

 

I'll guess 2018 Plus.

 

2018 prime plus is what it says on his profile page.

 

How does your state deal with sales tax on a new car? In PA, the trade in value reduces the sales tax (6%). That's about a $1200 saving you won't get if you sell your car outright.

 

One could also argue the sales price of the car is income leading to horrifying results

 

CA doesn't offer trade in tax reduction, so highest selling price is the best way to go.

 

Yeah, that is the way our state handles trade-in. When I traded in my 2017 PRIME Premium, I had to consider the tax saving. I ended up trading in $1500 less than KBB instant offer price at my local dealer where I purchased a new 2020 PRIME LE.

 

IIRC, that would only be if you have no tax basis in the asset. Usually tax basis is the price you paid, or the fair market value at the time if you inherited the car.

 

Dealers don't pay sales tax when they buy a car for their inventory for sale. The new owner will pay the sales tax. It makes no difference if you sell the car to Carvana or a dealer as far as the sales tax is concerned. Even if you buy from Carvana, you will still pay the sales tax unless you live in a state with no sales tax or other provisions. I'm glad Carvana gave an excellent price though.

 

You only pay a capital gain tax if you make a profit from selling your car. For example if you buy a car from an auction for $1,000 and then sell it for $10,000, you have a capital gain of $9,000 and it's considered taxable income.

However, the reverse is not true. If you sell your car at a lower price than you bought it, you cannot deduct a capital loss because it is considered personal property.

 

In some states, the trade in value of the old car reduces the amount of the new price car price that the sales tax is applied too.