I had a quick question for those who might know how Chicago (cook county) handles this rule.

In brief I'm going to sell my TSX and pick up an S2000. I was thinking that the best way to go about this is to sell private party and then buy a s2000 private party. However when would I have to pay tax on that? I know a couple people that have bought used cars and told me they never paid any tax on it.

Secondly, if I had to pay tax either way, than should I just buy a car from the dealer and trade mine in? That way I can just pay tax on the difference of the two vehicles?

I'm pretty confused on which path to take, any information would be greatly appreciated!!

 

In NY, you pay the tax when you register the vehicle so either way it works out to be the same whether it's priv purchase or dealer purchase. I bought my 350ZR in PA and paid 3200 when I registered it in NY; temporary tags cost 75 from PA to keep me legit for 30 days. When you write a receipt for sale of your car, that person will use that receipt to get the car registered, paying tax on the amt it was sold to him/her for (I suspect).

 

YES, you WILL have to pay for tax if you go private party. See this reference, it will answer ALL your questions.

http://www.revenue.state.il.us/taxfo...50taxchart.pdf

If you sell your TSX (private or dealer) , and won't have to worry about tax. However, if you buy the S2k private party... you will owe something, but depends on year of the car and how much you tell the state you paid for it once you register the car.

See the above reference.

Now, to answer the second part of your question, if you trade in your TSX for an S2K, then you only pay tax on the balance. For example, you get 22k for your TSX, but the S2k is 25k... then you are taxed (county percentage) on only 3k. I would definitely consider trading a car in ONLY if you get a GOOD trade value and you dont want to wait around for someone to buy your TSX.

 

This is what used to happen in NYS until people were walking in w/ receipts saying "I got $500.00 for a 2005 CL-S (it's now 2006 for this scenario) AS IS due to heavy crash damage." The DMV dragon ladies now sneer at you and ask for a lot more than some piece of paper to prove the car you're trying to register's value.

 

^ Thanks for the info, that's what I was looking for.

 

Actually in IL, you don't need a Bill of Sale. You just tell them... but I would be worried on an audit if the price of the car is significantly less then it's market value.... MY RL's plate's expire this month (still on previous owners plates) and I'm not sure what I'm going to do when I register it. Err.. "say." Since I got the car for 29k (and it's an '05), I owe 1200. If I lie and say less... I could pay less, but honestly, I don't think it's worth it since the car is already significantly below blue book. I also have a BOS I wrote up for the previous buyer.

 

On the sales contract if you put less than $15,000, you will only pay about $100, but if you put $15,000 or more, it will come out to at least $700 worth of taxes that you will need to pay.

 

Actually when all is said and done you will need a bill of sale. When I bought the Lexus I paid slightly under $15,000, but the value of the car was more. I received a letter from the IRS asking for the bill of sale and an envelope to include a check for $700 if I didn't have the bill of sale.

Honestly saying they never know what condition the car is in when you buy it. Some cars are sold for a lot less because you need to put some $ into it.

 

Tax issues aside, as for the other part of your question, you will almost always do better buying and selling private party. Dealers won't give you d!ck on a trade in, and their used car pricing has to cover all of their overhead (showroom, sales people, etc).

Plus I find that dealing with a PP is usually more pleasant - They know the car, they may be a fellow enthusiast, and they're not out to see how bad they can hose you.

 

Thanks, this was the answer I was looking for. I take it the state did its due diligence and wanted you to prove the car was bought for under 15k? I assume if you said it was bought for 25k, then you probably would have never received a letter....

 

Yep, they actually sent me the "true market value" of the car and what it should have cost. The only reason they did this is because they said they never received the bill of sale to begin with, which I provided to the DMV (or currency exchange.)

 

interesting.. someone PM'd me this... what do you think FastAcura?

 

That's weird. I'm assuming they randomly pick people out who didn't provide the bill of sale. I remember sending them the fax 3 times because they said they never received it. $250 was probably for taxes and new registration.