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In NU, what should I know about trade-in tax benefit for car loans?
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In NU, what should I know about trade-in tax benefit for car loans?

In Nunavut, when you trade in your existing vehicle at a dealership towards the purchase of a new or used car, the Goods and Services Tax (GST) is applied to the *net price* of the transaction. This means the value of your trade-in is deducted from the purchase price of the new vehicle *before* the 5% GST is calculated. For instance, if a new vehicle costs $40,000 and your trade-in is valued at $10,000, you would only pay GST on $30,000, not the full $40,000. This tax benefit significantly reduces the total amount of tax you pay upfront, directly lowering the overall cost of the vehicle and, consequently, the principal amount financed through your car loan. This long-standing Canadian tax treatment is designed to provide a financial incentive for consumers to upgrade their vehicles and is expected to continue unchanged into 2025, making trade-ins a financially advantageous strategy for car buyers in the territory. This reduction in the taxable base means you finance less, pay less interest over the loan term, and ultimately save money compared to selling your old vehicle privately and then purchasing a new one separately.

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