Financing Need help with trade-in

[dotScott]

Looking to purchase a new Kubota with a trade-in. I have a questions regarding the trade-in allowance and taxable rate. The invoice shows an allowance of $17,600 for the trade-in, there is also a line for amount owed which is $14,000. My question is, should the total amount of the trade be used to reduce the taxable rate or is the difference between owed and value used?

For example:

What I say it should be:
Total $23,000
Trade-in -$17,600
Taxable amount: $ 5,400
Tax @ 8% (NY) = $ 432

What the invoice shows:
Total $23,000
Trade-in $17,600
Amount owed $14,000
Net Trade-in $3,600

so

Total $23,000
net trade-in -$3,600
Taxable amount $19,400
Tax @ 8% $1,552

Big difference! I've never seen the amount owed used to determine the taxable amount. Is this the dealer trying to grab an extra $1,100?

 

[boomer1025]

looks like the dealer is going to take the 14,000 and pay off what you owe on the trade. Which would leave you with a 3600 trade in value on the new tractor. So 23,000 minus the 3600 is 19,400. Which I believe would be taxable.

 

[dotScott]

looks like the dealer is going to take the 14,000 and pay off what you owe on the trade. Which would leave you with a 3600 trade in value on the new tractor. So 23,000 minus the 3600 is 19,400. Which I believe would be taxable.

Thanks but what if I were upside down? Would I pay more tax on the tractor that I'm trading in after I already paid tax on the full amount when I purchased it?

 

[rngrrymd]

Thanks but what if I were upside down? Would I pay more tax on the tractor that I'm trading in after I already paid tax on the full amount when I purchased it?

Yes, you would pay tax again on the old tractor in that situation. If your old tractor was paid for instead of you owing on it then your first scenario would have worked out. Since it seems you are financing the new purchase hopefully you are getting a 0% interest rate offer from Kubota. Don't forget - if you finance with Kubota you need to add the cost of KTAC insurance to get your total monthly payment.

 

[dotScott]

Thanks. Got the 0% and understand KTAC. I'd want that anyway. I'm not the most careful operator and I understand from the other posts here that it's well worth the cost.

 

[AndyMA]

Thanks. Got the 0% and understand KTAC. I'd want that anyway. I'm not the most careful operator and I understand from the other posts here that it's well worth the cost.

Good Idea, my dealer showed me some examples of what KTAC covered and getting it was a no brainer. He also said no other insurance he's ever seen covers so much.

Andy

 

[RandyinTN]

Doesnt your state have any type of program where farm equipment can be purchased sales tax free if you use it to maintain the property?