Thread: Selling your car and taxes

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I'm getting ready to try to sell my street rod, and I'm not sure what I'm supposed to do with the money, from the IRS's point of view.

First off, I know cash is best, but what other forms of payment should I require? Certified check?

Secondly, any other transaction other than cash will require a bank. I expect they will ask some questions or even give me some tax forms when I show up with a 30K+ check.

What's the best way to handle this? Any tips or suggestions?

Any transaction over $10 K will get held, and scrutinized.

If you run it through the bank, then it's income. You'll have to do a tax schedule, write off your cost vs. Sale amount and the net will be taxable income.

This comment will probably raise some eyebrows but here goes anyhow:
"I would do everything possible to pay as little or no tax, if I could !"
Sorry but "THEY" get enuff tax from us as it is !

meller

Hey Andy,

As a fellow '37 owner, I'm sorry to see you're letting it go. I've watched your "build video" several times and you did a nice job with the car! Plus, you went the extra mile and put a Ford engine in a Ford! Hope the new owner really enjoys it!

Does this mean you're going to build another?

Best,
Randy

I'm with Meller. You already paid taxes on the original car, the parts that went into it plus the license and registration fees. You may also have a property tax in your state that needs to be paid yearly. Then there is the fact that you probably will not get back the amount that it cost to build. I have never paid taxes on a 'cash' sale of a car - though the buyer will so take care when you make up a Bill of Sale and not 'fudge' the final figure too much for the buyer - that could come back and bite both of you. Yeah, I know, never ever would you do that

Get cash and when you go to the bank only deposit small amounts at a time. It may take longer that way but you don't raise eyebrows doing it slowly.

Any cash deposit of over $10,000 is reported. Checks are not cash. Transactions between private individuals do not require the seller to collect sales tax in most states. Buyer may be responsible for tax, most states do not tax private sales.

IF you sell car for a profit, the profit may be subject to some state tax. IRS doesnt ask about a single car sale profit....who ever makes a profit on a private car sale?

if you buy one of mine you buy it through the banks. i will not accept your check nor will i do a cash transaction .

What are you saying here shine enlighten me, how does it work ? You saying cashers check?

$30K through your account will show in an audit, whether you use small transactions or lump sum.

Get cash, and buy physical silver.

When I picked up my roller we did an Electronic Funds Transfer, where my bank electronically debited the money from my account and seamlessly deposited it in the seller's account at his Arkansas bank via the bank routing numbers. All done in the blink of an eye, no questions asked, and no delays. The guy gets the title & keys when your banker tells you the funds have hit your account, and the transaction is secure.

Here in KC we had a team going around buying cars from individuals about twenty years back using counterfeit cashier's checks. They would go to the guy, seal the deal, tell him they were going to get a cashier's check and come back in an hour to pay him and get the car & title. Problem is they had the embossing machine in the trunk of their car, and the checks were worthless.

i'll take no paper . when i sell one my bank has the title signed and ready. my banker drafts off your bank and guarantees your banker the title. i have seen too many folks burnt. and i'm not about to carry 40k around in my pocket at a show.

I like the electronic idea, shine so you hand the bank your title. The purchaser goes to your bank and pays them, the bank hands over the title. So you are standing in the back ground so to speak, the bank does this without a fee.

Interesting these two ways of doing a big dollar deal, thanks to both of you. The processes sound safe and leaves the money verification to the bank............nice!

I KNOW shine's attitude of government / small business.

I suppose the taxes are a small price for peace of mind.

If you're selling a vehicle that you've owned and used as personal transportation then to me there is nothing to report that would result in a tax liability. With an electronic transfer there is no "reporting" of amounts received, and if you're not a dealer then it's not business income. If I sell my welder and all the accessories for $1000 that is not "income". If I built a really nice welding cart, had it painted and pinstriped by some know striper and sold the setup for $5000 it's still not income if I'm not a licensed business selling equipment. Maybe I'm wrong, but I don't think an individual ever mentions proceeds from the sale of any real or intangible property other than a house on their taxes, and there's no expectation that they would.