Need Advice: Private Party Car Sale

[Jayhox]

All of my car deals have always been through dealerships. I may be selling my car and purchasing an E36 M3 from another individual (no dealership involved). In two separate transactions, what are the tax implications:

1) When I sell my car, I will need to pay off the buyout amount with BMW Financial. Is there tax above the buyout amount stated by BMW? Do I pay any tax on the amount I receive for the sale of my car to a private individual?

2) When I purchase the M3 from a separate individual, do I report the sale amount to the state/fed and pay tax on that amount? Is there any "wash" between the amount I sell my car for and the amount of the car I purchase?

I have traded/leased my last several cars and cannot remember how the private sale works. I know there is some sort of tax advantage if you can work a trade-in with a dealer. What am I about to face?

Thanks,

[stimpee]

There should be no state or federal tax implications with selling/buying a car. It is not income, and you did not "profit" from the sales.

You may, however have to pay state sales/excise tax on the new car. Check to see if you can apply what you sold your other car for as a "tradein" value, so you only have to pay tax on the difference.

May be difficult to do.

Anyway, income tax issues don't exist.

Of course, as cek2 would say, "get a second opinion"

[jww///95]

Just give your state department of motor vehicles a call...

They should be able to help you out although if they are anything like the operation here in maryland, good luck.

[T///MW]

in MA, it doesn't really matter what you buy the car for they are going to charge you tax on the NADA (national assoc. of automobile dealers - nada.com) value.

I purchased my car for significantly under NADA but still had to pay all the tax. I was not able to roll the sale of my other car into the "tax basis"...but it is defintiely worth trying.

My bottom line experience with taxes is that the state is going to stick it to you in every way possible...

Tim