Buyback question about sales tax

Hi,

I'm still on the fence about buyback or fix. If I return the car to VW and get a new car, would I have to pay sales tax on the new car or not?

Details:

I have a 2015 GSW TDI S 6sp manual and my repurchase amount is $25,187.93. I can buy a 2018 GSW TSI S for about 18K plus taxes, etc. but I'd like to avoid paying the 6% MD sales tax if possible, similar to how this would work if it was a trade in. In my area (DC metro) the buy back stations are remote (not where the dealerships are). One dealer says these would be two complete transactions but I'm not convinced they are competent and willing to help a customer. I haven't scheduled an appointment yet since I'm still hesitating whether to return the car or not. I like driving the TDI and I don't see many attractive cars out there (I need a wagon, cheap, stylish and fun to drive... TSI S 4Motion might be it but I'm not sure yet)

Any time you buy any car you have to pay sales tax.

The dealer is correct about it being two separate transactions, unlike a trade, because VW corprate is the party buying back your car, not your local dealer.

I wish it was different, but it's the Government getting their cut like normal.

Thanks for the response!

Maybe I didn't make it clear though. In MD at least, you pay tax on the difference between the value new car and the value of the trade in. If I buy a 20K car and trade in a 10K car, I only pay 6% of the difference, i.e. 600. If I trade in a car of equal value or higher value than the car I'm buying, I pay no tax.

So, again, this is not a trade-in but the it's a similar situation.

Another dealer told me I won't pay tax... contrary to what the first dealer said... but I don't trust either. I'll definitely find out if I get into a transaction but I kinda like to know in advance.

It's going to depend on your state's rules, but the key point is that it's two separate transactions--you're selling your car to VW (not to any dealer), and you're buying a different car from a dealer (not from VW). The 3.0 settlement gave you a trade-in as an option, but the 2.0 settlement didn't.

I expect the answer will be that you're going to pay sales tax on the full purchase price of the replacement car.

You are not trading in a car and buying a car. You are selling one and buying another. Two different scenarios with two different tax implications. Check with your state though as there were a few states that were allowing what you describe for this situation. Cross your fingers and sleep at a Holiday Inn Express.

You will NOT get trade credit. They changed it for 3.0 settlement, but 2.0 did not get this option.

You sell the car back to VW America. You are buying new car from VW Dealership. One has nothing to do with the other.

Confirmed, this was an oversight in the 2.0 settlement that was fixed for the 3.0. (with the caveat that you had to buy a new same brand car)

flargabarg said:

(with the caveat that you had to buy a new same brand car)

Click to expand...

Neither new nor same brand is a requirement under the 3.0 settlement (though depending on your state's rules on the subject, the trade-in may only benefit you with a new car). It has to be sold by the same dealer, but many dealers sell more than one brand.

Then I misread the documents. Thanks for the clarification.