Califoia Sales Tax Deduction
#1
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I know there are several of us in in California that will be getting our cars in early January. CA sales tax will not be fully deductible next year. Does anyone know if dealers will allow payment before the end of this year and if so, what are the risks?
#2
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as long as the VIN is out, they can collect money. prior to VIN existence, they cannot write a legal contract.
risk? i dont see many,
however, i was not aware that sales tax was deductible? perhaps this is through your business?
risk? i dont see many,
however, i was not aware that sales tax was deductible? perhaps this is through your business?
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^ good to know. but i am in CA... tax every where ha
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Isn't the itemized deduction the greater of state income tax or sales tax paid?
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I think
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IMO, paying the sales tax in 2017 on your California car delivered in 2018 puts the dealer at risk.Something about an exchange of goods having taken place on a date certain. He would probably have to check it out with his legal folks.
Given the $10,000.00 deduction limit mentioned above, one thing you might consider is paying your 2018 property tax payment before the the end of 2017. You'd need to do a little tax number crunching to see if that's an advantage to you. Oh, and, while your at it, you may want to make sure you get a California tax refund on your 2018 return. If you end up owing the state money on 4/15/18, that amount may not be available as an itemized deduction on your 2019 Federal tax return, again, given the 10k limit mentioned above.
Last edited by fuddman; 12-22-2017 at 02:30 AM.
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However, that all goes out the window in 9 days. Everybody is limited to 10,000 in SALT deduction if they itemize. CA, NJ, NY, and CT guys are going to get screwed.
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I'm not sure if your question was rhetorical or not....or if you were just venting.
People living in states that have very high property, local and state taxes tend to itemize because they can deduct these costs (which is more than the standard deduction) against their income. I have friends who live and work in NJ who are making around $400k and deduct over $50k just in property and income taxes every year. Next year they will only be able to deduct $10k which is not enough to off-set the increased standard deduction and lowered tax rates. And the $10k limit is the same for a married couple as it is for a single indivdual so a joint return cannot deduct $20k.
To make you feel even better......interest on new mortgages over $750k will not be deductible either. So if you currently live in NYC, SF or LA and own an expensive property, good luck selling it. New buyers will be much less inclined to buy it. At a minimum, property values will be impacted.
I think these are mostly good changes. People living in low taxed states should not be subsidizing those living in highly taxed states (and I would argue extremely mismanaged states)
People living in states that have very high property, local and state taxes tend to itemize because they can deduct these costs (which is more than the standard deduction) against their income. I have friends who live and work in NJ who are making around $400k and deduct over $50k just in property and income taxes every year. Next year they will only be able to deduct $10k which is not enough to off-set the increased standard deduction and lowered tax rates. And the $10k limit is the same for a married couple as it is for a single indivdual so a joint return cannot deduct $20k.
To make you feel even better......interest on new mortgages over $750k will not be deductible either. So if you currently live in NYC, SF or LA and own an expensive property, good luck selling it. New buyers will be much less inclined to buy it. At a minimum, property values will be impacted.
I think these are mostly good changes. People living in low taxed states should not be subsidizing those living in highly taxed states (and I would argue extremely mismanaged states)
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I don't think it will impact property values much here in CA. The tax in your example is sales tax on an RS. Besides, we have this.
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He also may own a $2 million+ home. Although he can deduct all of his interest on that home now and into the future (grand fathered), the next owner can only deduct mortgage interest on the first $750k. That is a loss of $50k of interest deductions (assuming 4% interest on a 2 million mortgage). Add that to the $90k of deductions lost already (assuming the new buyer has the same income) and he is going to get screwed on taxes. This will impact property values of expensive property in these states even if only on the margin. There can be no other result.
Obviously, the example above is rough with many assumptions and everyone's situation is different. But use many of the online calculators and they show that high earners in the high taxed states are going to lose. That is why the few republicans remaining in these states voted against the bill in the house.
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Also - I agree CA is just gorgeous. I was born in Monterey and went to Grad school out there. It's a shame what bad policy does to a perfectly good state. I would never live or work out there.