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It's referred to as an "in and out". Here's how it works: I find Joe Blow to buy my car for 10,000. The dealer is selling me their car for 20,000. On the paperwork the dealer shows a trade in value of 10,000. The difference is 10,000, and that's the amount you will pay taxes on. In Texas it's 6.25% sales tax on a new car, so the "in and out" saves you 625.00 in taxes. It has no effect on Joe Blow who's buying your car. He is paying tax on the purchase price weather he buys the car from you or the dealer. The dealer will usually charge you 100-150 to do the paperwork. I have done this many many times. You should pick up the small charge for the paperwork and net the buyer out at 10,000. So, this example puts an extra 625.00 in your pocket. Hope this helps you
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