When a Dealer buys a bike from a person do they have to pay state sales tax on that purchase? (Assuming there is a state sales tax in their state)

I am trying to understand why the "cash value" of a bike is less than the trade-in value for a bike.

 

Not in California provided the dealer is purchasing the vehicle for resale and has the appropriate tax exemption status. Also in California, if you trade in your vehicle towards a new vehicle you still pay sales tax based on the full sale price of the car and not the price after trade-in credit.

 

No, dealers aren't paying tax on your trade in, they are exempt. Not sure what you mean by the cash value but if I'm understanding correctly you are referring to what they would give you straight up on your bike vs what they give you for your bike trade in towards a new bike?

If that's the case it's a simple case of they are making money on both your trade and the bike they are selling you vs only making money on what they sale your bike for. Basically they can allow extra towards a trade because it's profit on both ends of the deal for them

 

That sucks, here you only pay taxes on the difference so trade in a 10k vehicle on a 20k vehicle you only pay taxes on the 10k difference

 

and California taxes that same vehicle over and over again when the new buyer steps into DMV to register it

 

Just to be clear, I am not talking about a trade-in. I am talking about selling your bike to the Dealership for cash. That is what I mean by "cash value". The "cash value" to the Dealership appears to be different from the trade-in value. So I am wondering if the Dealership has to pay taxes if they purchase the bike from a customer for cash (not trade-in)

 

In Washington State, you have to pay the tax unless you get the dealer to actually deliver it out of state. Not even picking it up in a trailer exempts the tax. I was just going to buy a 2018 UTV from a dealer in Washington, but they told me they had to collect sales tax. On another purchase this spring, I was set to buy a second Harley to have here for friends to ride when they visit with family in cages or by RVs etc. They told me I had to pay sales tax. I declined and I am buying one from a private sale if it is as solid as the owner says, no tax until I register it in Idaho.

 

Still you are misunderstanding what I am asking.

I am asking if the DEALERSHIP has to pay taxes if they purchase a bike from someone. Lets pretend the Dealership sees a bike for sale on Craigslist that is obviously under priced. The Dealer buys that bike. Does the Dealer have to pay sales tax on that purchase. The Dealer is buying the bike with the intention of re-selling it.

 

I'm curious on that too? I'm betting not, ant that tax is waiting on the next buyer. IDK.

 

The Answer to your question is NO they do not pay taxes. When they sell it to me or someone else that person will pay sales tax. The reason it is different is because they have the upper hand. They have an idea how much they want to make per deal. If that deal is only buying your bike than they will pay less for it. If you were to trade it in the can up the value of your bike because they know they are making more money on you purchase. Remember they also have to sell that bike and make a profit. So they are going to need to list the bike knowing that most likely someone will talk them down. That being said if they paid more if you bought a new bike they can justify selling it for less than they "paid" you knowing they sold you a new bike... Its all just a numbers game

Ps. I owned a used motorcycle shop, I finally opened right when the economy when to sh*t in 08