Buying or Selling a car in New Jersey comes packed with a lot of agreements and formalities that are to be duly fulfilled. One of the most asked questions about why buying a used car, the used car buyers have in mind is “Why should I have to pay taxes on a used car?” Well, let’s look forward to the explanation of this question.
It’s basically the social engineering power of taxation that comes into action. Firstly, since all the used cars are generalized to be less safe, assumed to consume more gas, require more maintenance as compared to the new ones, also these used cars are a big-time obstacle that prevents the sale of new cars, and overall are a drag on the economy. So, these are a few reasons why the sale of used cars is discouraged, and hence sales tax is applied when you buy one. There is no hiding the fact that it obviously generates extra revenue for the state, that comes along as a bonus.
Trading your car in with a dealer comes along with its own benefits as you get a nice tax break but selling the same car privately might help you earn even more money upfront. For eg. If you’re selling a car, it’s surely a good idea, to sum up, all the improvement costs and then determines the total value of your car. As if you consider selling it up for any more than that figure, you’ll be liable for capital gains tax.
Assuming, that the above facts made you understand why there is a need to pay taxes on a used car. There are not one but many reasons and are quite interlinked to each other