Utah Admin. Code R865-19S-72 - Trade-ins and Exchanges Pursuant to Utah Code Ann. Section 59-12-102
A. An even exchange
of tangible personal property for tangible personal property is exempt from
tax. When a person takes tangible personal property as part payment on a sale
of tangible personal property, sales or use tax applies only to any
consideration valued in money which changes hands.
B. For example, if a car is sold for $8,500
and a credit of $6,500 is allowed for a used car taken in trade, the sales or
use tax applies to the difference, or $2,000 in this example. Subsequently,
when the used car is sold, tax applies to the selling price less any trade-in
at that time.
C. An actual exchange
of tangible personal properties between two persons must be made before the
exemption applies. For example, there is no exchange if a person sells his car
to a dealer and the dealer holds the credit to apply on a purchase at a later
date; there are two separate transactions, and tax applies to the full amount
of the subsequent purchase if and when it takes place.
Notes
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