As Jalopnik’s resident car-buying expert and a professional car shopper, I get emails. Lots of emails. I’ve picked a few of your questions and will try to help out. This week we are discussing increasing Porsche prices due to the emissions recall and tax savings on out-of-state purchases.
First up, will the recall/stop-sale on Porsches drive prices up?
“Recently Porsche announced a stop-sale on models with the Sport Chrono package because the car could be polluting more in Sport mode or something. I would assume this means fewer cars available from Porsche dealers since they can’t sell them until a fix is found. Do you think this will drive up prices?”
Regardless of the overall economic situation, Porsches seem to be always in demand, and the Sport Chrono is typically a desirable option for shoppers. While I don’t think you are going to see substantial price increases due to this situation, expect to see a fairly dramatic reduction in the inventory. This is likely to mean that cars will get snatched up faster than usual.
It should be noted that the stop-sale applies only to Porsche dealers. If you find an affected model with Sport Chrono at a non-Porsche store, that car can be purchased. However, those of you who are hoping for a CPO car will have to wait until the stop-sale is lifted. For more details on the Sport Chrono stop-sale check out this Business Insider report from Jalopnik alumna Kristen Lee.
Next, do you still get tax savings for trading in a vehicle on an out of state sale?
“I was discussing with some friends the concept of trading in a car across state lines. Do you know if tax benefits for trades still apply for interstate trades? Will the local DMV disregard the tax reduction given as part of the trade and increase the sales price of the car for purposes of calculating local taxes when the vehicle is registered? Just curious.”
For those of you who are not familiar with these tax savings, here is how it works. In most states, you pay the sales tax on the difference between the sale price of the car you are buying and your trade-in value. For example, I live in New Jersey, where the sales tax is 6.625 percent. If I purchase a $30,000 vehicle, I would be on the hook for $1987.50 in sales tax. However, if I trade in a car worth $10,000 on that $30,000 car I would pay tax on the difference. In this case, that’s $20,000, which means I would be responsible for only $1,325 in sales tax. That is a tax savings of about $663.
The question from the reader has to do with applying those same tax savings on an out-of-state purchase. Let’s say I go over the border to Pennsylvania to buy that same $30,000 car with my $10,000 trade. Because both Pennsylvania
and New Jersey have the same tax policy, I would get the same tax savings.
The tricky part is if you are registering a car in a state with that trade-in tax savings and purchasing a car in a state that doesn’t’ offer that. The state that comes to mind is California. There you pay the full tax on the car regardless of trade. It’s also been my experience that regardless of where you are from and where you are registering the car, if you purchase a car in California and drive it off the lot, you would be on the hook for the full California tax.
Got a car buying conundrum that you need some assistance with? Email me at tom.mcparland@jalopnik.com!