UH OH, Taxes on 4Runner Sale?

[ElectroBoy]

In this crazy car market, for everyone who has sold your 5th Gen vehicle for a profit, or thinking about it, have you considered the tax implications?

If you make a profit it is a capital gain and has to be reported on your income tax return, and tax paid.

I have not seen any discussion of this in the forums.
Does this affect your decision to sell?

Your Income Tax and Selling a Used Car | DMV.ORG

What to know about taxes when you sell a vehicle - Carvana Blog

 

[spartacus]

In this crazy car market, for everyone who has sold your 5th Gen vehicle for a profit, or thinking about it, have you considered the tax implications?

If you make a profit it is a capital gain and has to be reported on your income tax return, and tax paid.

I have not seen any discussion of this in the forums.
Does this affect your decision to sell?

Your Income Tax and Selling a Used Car | DMV.ORG

What to know about taxes when you sell a vehicle - Carvana Blog

What you paid for the car + the cost of after market equipment this is your value. Sell price minus your value = profit and is taxed as capital gains. In most cases the value of the car plus mods usually ends up as a loss or wash and there fore not taxed.

 

[BlueRidge77]

What you paid for the car + the cost of after market equipment this is your value. Sell price minus your value = profit and is taxed as capital gains. In most cases the value of the car plus mods usually ends up as a loss or wash and there fore not taxed.

This whole thing is asinine. The govt does view vehicles as capital. So if you sell the vehicle for more than you paid plus “invested” you have capital gains and “should” report it. (How would they ever know…?) But if I buy a car, sell it 6 months later for a loss, I should in theory be able to report it as a loss, correct? How much time can elapse before reporting the loss? Can I buy a car for $40k and sell it 5 years later for $25k and show a loss of $15k on my taxes…?

 

[spartacus]

This whole thing is asinine. The govt does view vehicles as capital. So if you sell the vehicle for more than you paid plus “invested” you have capital gains and “should” report it. (How would they ever know…?) But if I buy a car, sell it 6 months later for a loss, I should in theory be able to report it as a loss, correct? How much time can elapse before reporting the loss? Can I buy a car for $40k and sell it 5 years later for $25k and show a loss of $15k on my taxes…?

I don't know the answer to your questions. Hopefully someone with a better tax knowledge can chime in.

 

[BlueRidge77]

I don't know the answer to your questions. Hopefully someone with a better tax knowledge can chime in.

No worries. It was somewhat a rant and not directed at you. The idea of of paying capital gains on a few thousand from the sale of a car is sickening to me. Especially when you are probably barely covering your sales and use tax which in my opinion should be part of the cost to establish capital gains…

 

[spartacus]

No worries. It was somewhat a rant and not directed at you. The idea of of paying capital gains on a few thousand from the sale of a car is sickening to me. Especially when you are probably barely covering your sales and use tax which in my opinion should be part of the cost to establish capital gains…

I hear you. The tax code is complicated to say the least.

 

[ads2539]

I don't know the answer to your questions. Hopefully someone with a better tax knowledge can chime in.

You cannot take a loss on a car’s depreciation on your personal tax return. You do have to pay tax on any gain, however.

If your company owns a vehicle, you can deduct depreciation on the vehicle every year based on an IRS table. In this situation, after x years the vehicle is worth $0, and any amount you sell the vehicle for is taxable.

 

[2021nightshade4x4]

You cannot take a loss on a car’s depreciation on your personal tax return. You do have to pay tax on any gain, however.

If your company owns a vehicle, you can deduct depreciation on the vehicle every year based on an IRS table. In this situation, after x years the vehicle is worth $0, and any amount you sell the vehicle for is taxable.

What about if you have a schedule C?


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[08TxRunner]

Uh oh! Uh oh!

 

[ads2539]

What about if you have a schedule C?


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You can deduct car expenses on a Schedule C.

In all cases, you can only deduct the portion that the vehicle is used for business purposes. So if the use is 50/50 personal/business, you only get half of the deduction.

 

[Tuco S.]

This whole thing is asinine. The govt does view vehicles as capital. So if you sell the vehicle for more than you paid plus “invested” you have capital gains and “should” report it. (How would they ever know…?) But if I buy a car, sell it 6 months later for a loss, I should in theory be able to report it as a loss, correct? How much time can elapse before reporting the loss? Can I buy a car for $40k and sell it 5 years later for $25k and show a loss of $15k on my taxes…?

Not suggesting what anyone should or should not do, but the IRS is so shorthanded they rarely even bother going after the big fish these days. Only way they would know if you made any profit selling a car is if you volunteer that info.

 

[RichinRidgewood]

In this crazy car market, for everyone who has sold your 5th Gen vehicle for a profit, or thinking about it, have you considered the tax implications?

If you make a profit it is a capital gain and has to be reported on your income tax return, and tax paid.

I have not seen any discussion of this in the forums.
Does this affect your decision to sell?

Your Income Tax and Selling a Used Car | DMV.ORG

What to know about taxes when you sell a vehicle - Carvana Blog

Thanks Captain Obvious.

 

[Kamalani Mahie]

In this crazy car market, for everyone who has sold your 5th Gen vehicle for a profit, or thinking about it, have you considered the tax implications?

If you make a profit it is a capital gain and has to be reported on your income tax return, and tax paid.

I have not seen any discussion of this in the forums.
Does this affect your decision to sell?

Your Income Tax and Selling a Used Car | DMV.ORG

What to know about taxes when you sell a vehicle - Carvana Blog

Nope haha. What the IRS doesn't know won't hurt them. Plus the value of my vehicle which includes my "investment" of modifications is much higher than even the crazy price I could sell it for. It's all the TRD Pro owners that bought their vehicle a year ago and are now selling it for more than they bought it that will have to pay capital gains tax lol.

 

[ElectroBoy]

Nope haha. What the IRS doesn't know won't hurt them. Plus the value of my vehicle which includes my "investment" of modifications is much higher than even the crazy price I could sell it for. It's all the TRD Pro owners that bought their vehicle a year ago and are now selling it for more than they bought it that will have to pay capital gains tax lol.

Yeah, you’re supposed to voluntarily report the profit as a capital gain and share your good fortune with the govt. But if you lost money on the sale IRS says too bad for you. But you don’t even have to report it. Kind of like gambling winnings.

 

[Humble Leader]

do you americans have to pay taxes on the vehicle price when you register it after purchasing it in a private sale? in canada, the buyer pays taxes when they register the vehicle in their name and get plates. there's a formula to determine the amount of taxes so someone can't just fill in a $1 sale price on the paperwork and avoid taxes. in canada most personal property is not subject to capital gains taxes, that includes vehicles

 

[KingPrat]

Not suggesting what anyone should or should not do, but the IRS is so shorthanded they rarely even bother going after the big fish these days. Only way they would know if you made any profit selling a car is if you volunteer that info.

I e-filed my documents in March, through an accountant, and STILL have not received my return.

Short handed is an understatement. They're a dumpster fire.

 

[ads2539]

do you americans have to pay taxes on the vehicle price when you register it after purchasing it in a private sale? in canada, the buyer pays taxes when they register the vehicle in their name and get plates. there's a formula to determine the amount of taxes so someone can't just fill in a $1 sale price on the paperwork and avoid taxes. in canada most personal property is not subject to capital gains taxes, that includes vehicles

Yes, the buyer pays a tax on used cars from private parties. I’m sure the rules vary widely from state to state, but in Illinois you can’t put $1 for the sales price, either. There are formulas. A relative of mine once bought a used car for $15,000, but the state said it was worth over $20,000 and they had to pay the tax based on the higher amount.

 

[Kamalani Mahie]

Yes, the buyer pays a tax on used cars from private parties. I’m sure the rules vary widely from state to state, but in Illinois you can’t put $1 for the sales price, either. There are formulas. A relative of mine once bought a used car for $15,000, but the state said it was worth over $20,000 and they had to pay the tax based on the higher amount.

[MENTION=654389]Humble Leader[/MENTION]
Yes but what you can do is report the "sale" as a gift via filling out a certain DMV form when you register the vehicle in your name which will qualify it as tax exempt...

 

[Kamalani Mahie]

Yeah, you’re supposed to voluntarily report the profit as a capital gain and share your good fortune with the govt. But if you lost money on the sale IRS says too bad for you. But you don’t even have to report it. Kind of like gambling winnings.

Yup and if you don't report it they might or might not eventually come after you...

 

[4r-4ever]

Insane right? that's why i keep my car for as long as i can. the government is always take take take.

This whole thing is asinine. The govt does view vehicles as capital. So if you sell the vehicle for more than you paid plus “invested” you have capital gains and “should” report it. (How would they ever know…?) But if I buy a car, sell it 6 months later for a loss, I should in theory be able to report it as a loss, correct? How much time can elapse before reporting the loss? Can I buy a car for $40k and sell it 5 years later for $25k and show a loss of $15k on my taxes…?