Does anyone know: I traded my freighliner for a pete, when i do my taxes do i have to claim the trade in value i got for the truck, i also borrowed money of course and know i can claim the interest on that but was wondering if i have to claim my truck as a sale.

 

If your traded in your Freightliner at a dealer there is no extra taxes. If you sold it outright then you would owe taxes.

 

Yes you have to claim the trade in value for your truck. It is called "recaptured depreciation".

From your nick, I'm going to assume you're from Canada.

Basically it works like this. You buy a truck for 100k, depreciate it down to 20k, and sell it for 50k.

50k - 20k = 30k

Now that 30k gets added to your income at the end of the year.

Now, don't accept any talk that you should take less money to pay less taxes! Complete hogwash! out of that 30k, you might have to pay 10k or so.

Maybe you can strike some type of deal with the dealership where they knock down their price the same amount you knock down the price of your truck. That way you don't take a tax hit.

You do know the depreciation schedule for Canada right? 20% the first year and 40% each year after that.

 

Are you sure Allan?

It sounds like this guy did not make any money on the trade in, so why would he have to pay any added taxes.

Lets say the PETE costs $100,000. He got $30,000 for his trade in. He still owes $70,000 on the Pete which he took out a loan to cover.

Is that basically what happened happykanuck?

I know tax laws can and do vary between the US and Canada, but is there that big of difference?

 

I am from the states, originally from Canada. I paid 80k for the Pete and they gave me 9k trade in value, the rest I financed. The Pete was bought through a dealership. Now the truck I traded in was fully depreciated, I had the truck for 6 yrs.

 

I think it might fall under "capital gains tax" depending how much equity you had in it.