topic Will I be charged tax on the sale of a car, when a bank refinance mandated that I pay off the lease early? Payoff amount in the loan was $10320, sale of car $12000. in Deductions & credits

Will I be charged tax on the sale of a car, when a bank refinance mandated that I pay off the lease early? Payoff amount in the loan was $10320, sale of car $12000.

burke-david-j — Wed, 14 Aug 2019 20:49:56 GMT

Re: Will I be charged tax on the sale of a car, when a bank refinance mandated that I pay off the lease early? Payoff amount in the loan was $10320, sale of car $12000.

Anonymous — Wed, 14 Aug 2019 21:22:23 GMT

sales tax is paid by purchaser not the seller. however, if after going off lease your purchase the vehicle, then in some states like Illinois, you will be required to pay sales tax on the purchase price with no credit for the sales tax you may have paid when you leased it.

Re: Will I be charged tax on the sale of a car, when a bank refinance mandated that I pay off the lease early? Payoff amount in the loan was $10320, sale of car $12000.

burke-david-j — Wed, 14 Aug 2019 22:22:52 GMT

Thank you for the reply. I am wondering if I will be charged income tax if I am able to sell it for more than the lease payoff amount of $10320. I will possibly make $1700 on the sale, and I am wondering how much income tax will be taken from that profit.

Re: Will I be charged tax on the sale of a car, when a bank refinance mandated that I pay off the lease early? Payoff amount in the loan was $10320, sale of car $12000.

Bees — Wed, 14 Aug 2019 22:44:57 GMT

Your cost basis is the amount your contract on the car was originally. If that was over the amount you sold it for you will not have a gain-so no tax due.

Re: Will I be charged tax on the sale of a car, when a bank refinance mandated that I pay off the lease early? Payoff amount in the loan was $10320, sale of car $12000.

burke-david-j — Thu, 15 Aug 2019 01:02:50 GMT

Thank you!