I recently sold my vehicle for 91% of what I paid for it 12 years ago. Do I have to report it to the IRS when I file taxes?
Thank you.
Income Tax Liability When Selling Your Used Car
In a nutshell, the Internal Revenue Service (IRS) views all personal vehicles as capital assets.
If you sell it for less than the original purchase price, it's considered a capital loss. This means you do not have to report it on your tax return.
However, if you sell it for a profit (higher than the original purchase price), or what is called a capital gain, you must report the windfall on your income tax return and pay taxes on it.
Hey DayWalker, found this on a website dmv.org (not associated with the government agency). I have seen the same information at other sources.
Furthermore @daywalker, from the same website as above:
Determining Capital Gain After Selling a Car
Deciding if you must report auto sales to the IRS is fairly easy:
Determine the original purchase price. If you don't recall, check the Bill of Sale or purchase contract.
Subtract all taxes associated with the purchase. Depending on your state this may include sales tax, use tax, and/or wheel tax.
Add any vehicle improvement costs to the adjusted purchase price. This does not include regular maintenance costs, only improvements. An improvement is deemed as anything that's long term, such as new paint or new stereo speakers.
Subtract what you sold the car for from the adjusted purchase price. So if you bought the car for $14,000 and sold it for $8,000, you would have a capitol loss of $6,000. You would not have to report this to the IRS. However, if you bought it for $14,000 and sold it for $15,000, earning a $1,000 capital gain, you would report this on your tax return, using Schedule D on Form 1040 that's appropriately titled "Capital Gains and Losses." The form will instruct on you needed information.
This system applies to all used cars that you sell. If have any questions, contact the IRS. Or download one of several pamphlets from the its website on capital gains and losses.
Thank you. This is what I was looking for.
Only if you claimed it as a business capital gain asset in the past, I think.
But yeah sorry. This is an auto forum not accounting advice 😆
Sounds to me like you lost 9%. Talk to your accountant.
I thought I only had to report it if I made money (so capital gains). However, in my
case I lost 9%.
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I have never sold a car before and figured others that have sold before would know.
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Basically, do you have to report a car sale on your taxes?