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Level 3

Tax on selling a Car

Hello,

I purchased a Car in 2017 . I am planning to sell it now. Do I need to pay taxes on the selling Price.

1 Best answer

Accepted Solutions
Highlighted
Level 15

Tax on selling a Car


@yashK wrote:

@DoninGA Got it. So it means that once I gift this car to my brother, I dont have any kind of tax liability with my car. I dont have to compare my purchase price and FMV at the time of me giving this as gift to my brother. But my brother should note down the FMV of the Car on the day I give him this gift because he will need to compare this FMV at the time of selling this car. 

As per my knowledge, the KBB price of this car is around 2k to 2.5k at this time. So I need not worry about any gift tax related thing also. Please let me know if all the above facts are true


What you described is accurate.

View solution in original post

7 Replies
Highlighted
Level 15

Tax on selling a Car

If you sell personal property for less than the purchase price, the sale is not reported on a tax return.

Highlighted
Level 3

Tax on selling a Car

The cars price have been decreased drastically. I purchase the car for 3K. So if I gift this car to my brother and he sells the car in future for 2k. Will he be needed to pay taxes on 2K ?

Highlighted
Level 15

Tax on selling a Car


@yashK wrote:

The cars price have been decreased drastically. I purchase the car for 5K. So if I gift this car to my brother and he sells the car in future for 2k. Will he be needed to pay taxes on 2K ?


The gift he receives is the Fair Market Value of the gift.  If the FMV is 2K when received and he sells the vehicle at 2K then it does not have to be reported on his tax return.

Highlighted
Level 3

Tax on selling a Car

How can I know the FMV of the car

Highlighted
Level 15

Tax on selling a Car


@yashK wrote:

How can I know the FMV of the car


The FMV is what a willing buyer will pay from a willing seller.  Look at the prices of a similar vehicle in your local newspaper or your local websites for cars being sold for the year of the vehicle.

Highlighted
Level 3

Tax on selling a Car

@DoninGA Got it. So it means that once I gift this car to my brother, I dont have any kind of tax liability with my car. I dont have to compare my purchase price and FMV at the time of me giving this as gift to my brother. But my brother should note down the FMV of the Car on the day I give him this gift because he will need to compare this FMV at the time of selling this car. 

As per my knowledge, the KBB price of this car is around 2k to 2.5k at this time. So I need not worry about any gift tax related thing also. Please let me know if all the above facts are true

Highlighted
Level 15

Tax on selling a Car


@yashK wrote:

@DoninGA Got it. So it means that once I gift this car to my brother, I dont have any kind of tax liability with my car. I dont have to compare my purchase price and FMV at the time of me giving this as gift to my brother. But my brother should note down the FMV of the Car on the day I give him this gift because he will need to compare this FMV at the time of selling this car. 

As per my knowledge, the KBB price of this car is around 2k to 2.5k at this time. So I need not worry about any gift tax related thing also. Please let me know if all the above facts are true


What you described is accurate.

View solution in original post