A trade-in allowance reduces the purchase price when the seller takes a motor vehicle in trade.
The vehicle must be titled in the name of the customer trading in the vehicle except in the following situations:
- A child is trading in a vehicle titled in his or her parent’s name
- An individual is trading in a vehicle titled in his or her spouse’s name
The trade-in of an off-road vehicle does reduce the purchase price of a motor vehicle. However, sales tax for the motor vehicle is calculated on the full purchase price before the trade-in allowance.
|What type of vehicle is being purchased?||What type of vehicle is being traded in?||What price is sales tax calculated on?|
|Motor vehicle||Motor vehicle||The purchase price after subtracting the trade-in allowance|
|Motor vehicle||Off-road vehicle||The purchase price before subtracting the trade-in allowance|
For more information, see Off-Road Vehicle.