tax questions regarding ford incentives

[alfaromeo]

Hello everyone,

 

This is my first post in the forum.

 

I am looking at the 2010 Edge recently and almost close the deal with one local dealer. But the dealer charge me tax on the incentives from ford. For example, if the vehicle MSRP is 36000, ford incentive is 3000, tax rate is 10%, then what in my mind about the vehicle price is:

 

(36000-3000) x (1+10%)=36300

 

But the dealer charges me like this:

 

36000 x (1+ 10%) - 3000 = 36600

 

This is the first time I deal with dealers for a brand new vehicle, it really confuses me. When I did my home work in internet, nobody mention the incentives are charged for tax. All the pricing website gives price after incentives (MSRP or Invoice) as the list price minus incentives directly.

 

What do you guys think? I live in Illinois.

 

Thanks in advance. Every word is appreciated. Thank you.

[akirby]

Hello everyone,

 

This is my first post in the forum.

 

I am looking at the 2010 Edge recently and almost close the deal with one local dealer. But the dealer charge me tax on the incentives from ford. For example, if the vehicle MSRP is 36000, ford incentive is 3000, tax rate is 10%, then what in my mind about the vehicle price is:

 

(36000-3000) x (1+10%)=36300

 

But the dealer charges me like this:

 

36000 x (1+ 10%) - 3000 = 36600

 

This is the first time I deal with dealers for a brand new vehicle, it really confuses me. When I did my home work in internet, nobody mention the incentives are charged for tax. All the pricing website gives price after incentives (MSRP or Invoice) as the list price minus incentives directly.

 

What do you guys think? I live in Illinois.

 

Thanks in advance. Every word is appreciated. Thank you.

 

In GA you pay tax on the purchase, then the incentives are deducted so yes, you pay tax on the rebate because it is a REBATE from the mfr after the sale, not a discount, even though the dealer gives it to you as a discount.

 

The dealer is correct (in GA at least).

[L1TECH]

Something doesn't sound right. If sticker price is 36,000 and Ford rebates you 3000 then you should only be paying tax on 33,000. If the tax rate is 10% that equals 36,300. That's the way it has always been for me. Now when it comes to dmv licensing I always have to pay the vehicle license tax on the amount that the vehicle is worth, not what I bought it for.

[vita10gy]

It's kind of sneaky, but it makes some sense. It's a rebate, which is essentially them paying you, after the fact. If you look at your paper work they count that as part of what you're putting down, not taken off the price.

 

If you bought an item for $500 that had a $100 mail in rebate, you're going to pay tax on $500, and get the rebate later, and that's really all that's going on here, except instantly.

 

It would be nice if they were a bit more upfront about what the repercussions calling it a rebate are, as it wasn't obvious to us until after the fact.

 

(Although we get to do the paper work again because the dealership sold our car twice. Hurray!)

[ablb]

Greetings and welcome

 

Are you trading something in?

 

We pay tax on the agreed on price 36K minus book value of the trade in.

 

Example: $36000 - $12000 (value of trade in (we already paid the tax on the 12K 3 years ago)) =

$24000 taxable

 

ab

Edited July 2, 2010 by ablb

[microman]

In South Carolina I only paid $300 in Tax on a new 2010 Edge Limited. I don't remember is the tax was figured on the price before or after incentives. But the dealer said the tax was caped at $300.

[akirby]

This is an after the sale, mfr rebate. The fact that most dealers give you credit for it at the time of sale doesn't change that fact so you pay taxes on the sale price, then you get the rebate. That's just how it works. If it was a mfr's discount then that would come off the purchase price. It's really simple.

[alfaromeo]

Thanks everyone. I check it up in the state government official website and get the answer. It says if the dealer will get any source to reimburse the cost of incentive, i.e. dealer will get money back from manufacturer or someone else, the incentives will be taxed. Otherwise, for example, dealer sells at the lost of the incentive number, it will not be taxed. Back to my case, the incentive is taxable.

 

I am in Illinois.

 

P.S. I bought the Edge for my wife and she loves it.

 

Thanks again.