Buy

Advice on tax implications of selling and buying a car?

Discussion in '348/355' started by MRF40@yahoo.com, Jul 20, 2021.

  1. 19633500GT

    19633500GT F1 Veteran
    Rossa Subscribed

    Nov 9, 2010
    8,430
    Blueberry
    Full Name:
    Muffin-Tops
    I spoke with a DMV employee here in CT, and who knows if this is 'divulged' information, but he informed me they are an agnostic entity, and information does not leave them to the IRS, Banks etc.

    Cannot confirm or deny this, but just saying.
     
  2. To remove this ad click here.

  3. Natkingcolebasket69

    Natkingcolebasket69 F1 Veteran
    Rossa Subscribed

    If u trade In through a dealer u are good


    Sent from my iPhone using Tapatalk
     
  4. plastique999

    plastique999 F1 Veteran
    Silver Subscribed Owner

    Nov 9, 2008
    6,593
    SoCal
    Full Name:
    Edward
    I need to do this


    Sent from my iPhone using Tapatalk
     
    Texas Forever likes this.
  5. plastique999

    plastique999 F1 Veteran
    Silver Subscribed Owner

    Nov 9, 2008
    6,593
    SoCal
    Full Name:
    Edward
    Details?
    Let’s say a car $300k is worth $500k ($200k appreciation)
    You then buy a car for $400k but then …. Ask dealer to sell for $200k and roll $ over??
    (Btw, I asked my dealer and he wouldn’t do this)


    Sent from my iPhone using Tapatalk
     
  6. Natkingcolebasket69

    Natkingcolebasket69 F1 Veteran
    Rossa Subscribed

    Ah- i wasn’t thinking on a car u are so up in value. That maybe a bit of an issue there.


    Sent from my iPhone using Tapatalk
     
  7. To remove this ad click here.

  8. Culprit

    Culprit Formula Junior
    Silver Subscribed

    Apr 4, 2011
    371
    Santa Ana, CA
    Full Name:
    Ian
    I'm surprised at the responses advocating outright tax evasion... Plenty ways to reduce your tax liability legally! A dealer's license is a great way, but probably not worth the hassle if you keep it to these couple transactions. If your new asset is potentially a depreciating asset, buying it through your own corporation (needn't be a dealer) is a solid option. Buying and selling through the same third party dealer can work but depends on the state, I think. In any case, have a great accountant is essential.
     
    Texas Forever and Stand4x like this.
  9. Alcav5

    Alcav5 F1 Rookie
    Rossa Subscribed

    Jul 28, 2012
    3,089
    Scarsdale, NY
    Full Name:
    Al

    Other states may differ. This is my experience .
    In NY to get a dealers license is a pia. Iirc you need to prove you are a dealer (place of business , incorporation) and you need to do X amount of deals a month or year , not sure . Anyway I looked into it and decided not worth it for the amount of car changes I do.

    So without a license if I sell/trade in a car to a dealer that I bought for $100k from a private owner and the dealer pays $120k , they don't have reason to report my gain , in fact they don't know or care what I paid . I probably (there are thresholds) do have a responsibility to report a gain on my taxes but I guess as long as it's not excessive (hundreds of thousands) the IRS is not going to be looking or notice my banking transactions. Perhaps a hypercar sale where one could make a half mill or so , that would stand out from one's usual returns , I suspect the IRS will notice the transactions.
    As for dealer I sold / traded the car in to , they will hold the full amount on books for me for tax purposes in case I buy another car from them within a year or so.
    If I buy a $120k car from said dealer , taxes will wash , if I buy a $100k car , taxes will wash but I will lose the $20k as it is a one time/deal credit can't save it for another car.

    :)
     
  10. Innovativethinker

    Innovativethinker F1 Veteran
    Silver Subscribed

    Aug 8, 2009
    6,081
    Bear Creek, Ca.
    Full Name:
    Mark Jones
    I was somewhat joking, but you can deposit cash over an extended period of time in varying amounts. It would take 3 months, but it wouldn't raise eyes that much.

    The limit before banks take notice, at least the banks I know, is $2,500. If you are depositing less than that at any one time, you should be good.

    I deal with cash quite a bit, I don't avoid taxes, but also do not wish to deal with unwanted attention.

    The amount varies by bank, and perhaps by branch. Generally not public knowledge.
     
    19633500GT likes this.
  11. plastique999

    plastique999 F1 Veteran
    Silver Subscribed Owner

    Nov 9, 2008
    6,593
    SoCal
    Full Name:
    Edward
    So this is my question with hypercars…
    You have people like Manny who buys a Bugatti and flips it for $1 mil profit….he has to pay $3-400k in taxes? That’s just nuts


    Sent from my iPhone using Tapatalk
     
    Texas Forever likes this.
  12. To remove this ad click here.

  13. Natkingcolebasket69

    Natkingcolebasket69 F1 Veteran
    Rossa Subscribed

    1-probably can afford it
    2-must be titled under one of his companies and he probably off sets the thing with some business losses (construction etc)

    The rich only get richer. They never get played by the system


    Sent from my iPhone using Tapatalk
     
    Texas Forever likes this.
  14. ttforcefed

    ttforcefed F1 World Champ
    Rossa Subscribed

    Aug 22, 2002
    16,331
    i wld think car youtubers are writing off the cars as work expenses...not registering them in their personal names etc...
     
    Yassa and Natkingcolebasket69 like this.
  15. Natkingcolebasket69

    Natkingcolebasket69 F1 Veteran
    Rossa Subscribed

    Yeah but the example discussed here is if your car appreciated, how do they ensure they don’t pay taxes


    Sent from my iPhone using Tapatalk
     
  16. ttforcefed

    ttforcefed F1 World Champ
    Rossa Subscribed

    Aug 22, 2002
    16,331
    gotta pay to play
     
  17. Natkingcolebasket69

    Natkingcolebasket69 F1 Veteran
    Rossa Subscribed

    Yeah but that’s what I’m saying manny probably has the car under one of his company and maybe when he sells he offsets it with some renovation of some office etc


    Sent from my iPhone using Tapatalk
     
  18. ttforcefed

    ttforcefed F1 World Champ
    Rossa Subscribed

    Aug 22, 2002
    16,331
    i just do the same as i do with my stocks, houses, etc...never sell anything, ever
     
  19. ShineKen

    ShineKen F1 Veteran
    Silver Subscribed

    Aug 3, 2007
    9,035
    Southern California
    Full Name:
    Buy Manuals
    I’ve said it here before. This inflation environment is going to create lots of taxable events for the gubment. No way around it. You’re paying taxes because you made a profit. That’s how the U.S works. Still better than losing money :).

    One way is to do partial cash in the sale to report lower sale amount.


    What about borrowing money against the car vs selling it? I’ve never looked into this, but could be one way to avoid a taxable event.
     
    Yassa, Texas Forever and plastique999 like this.
  20. ShineKen

    ShineKen F1 Veteran
    Silver Subscribed

    Aug 3, 2007
    9,035
    Southern California
    Full Name:
    Buy Manuals
    I have my cars under my company but that’s only to expense depreciation and it’s like a 25 year depreciation structure. Barely anything in the grand scheme of things. And when you sell the car for a profit, all that depreciation work pretty much goes out the door as you’ll be paying taxes on the difference between what you sold for and the depreciated IRS value reported.


    This thread is about something else. This thread is about paying taxes on profits on a car. Not really about depreciation expense, although it plays a small factor in the math.
     
  21. randkin

    randkin Formula 3

    Aug 2, 2015
    1,360
    Somis, CA
    Full Name:
    Randy
    Not so the bank will file a suspicious activity report (SARS) of you do a bunch of $9k transactions. IMO better have one large $50k report which are usually ignored unless you are audited, they are much more likely to audit several SARS reports. But either way you are tempting fate by not reporting the gain, tax fraud carries criminal penalties in addition to tax and interest penalties. I just don’t think the risk is worth the possible negative out comes. Suggest you just pay the cap gains tax.
     
  22. AceMaster

    AceMaster Three Time F1 World Champ

    Feb 6, 2009
    31,218
    Ontario, Canada
    Full Name:
    Mike
    You get taxed for capital gain if profiting on a car sale?
     
    Texas Forever likes this.
  23. emac

    emac Formula Junior
    Silver Subscribed

    Sep 14, 2014
    809
    upstate SC
    Full Name:
    ernest
    I have never really considered selling a car as a capital gain. I rarely have that problem. If so, you would need to add up all the expenses associated with owning the "property" to offset the gain. Insurance, storage, upkeep, etc. I think if you sell a car every few years, it wouldnt be an issue. If you are doing it as a business, you may need better records.
     
    Texas Forever likes this.
  24. johnk...

    johnk... F1 Veteran
    Owner

    Jun 11, 2004
    8,959
    So how is that different than buying 1000 shares of Tesla at $30 and selling them at $800? It's the cost of doing business.
     
    Texas Forever likes this.
  25. johnk...

    johnk... F1 Veteran
    Owner

    Jun 11, 2004
    8,959
    NO. Ordinary expenses like insurance, normal maintenance,... can not be applied to increase the basis.
     
  26. jjtjr

    jjtjr Formula Junior

    Aug 29, 2016
    514
    Vermont
    Full Name:
    john truskowski
    Really no different than paying 6K sales tax when purchasing a 100K car. And the taxes/tax rates keep increasing. At some point we will all be forced to liquidate our assets and become dependent on the government assistance.
     
  27. OCKlasse

    OCKlasse Formula Junior
    Rossa Subscribed Silver Subscribed

    Oct 5, 2006
    290
    Newport Beach, CA
    Full Name:
    Brandon K
    I’m almost certain Manny has a dealer’s license.
     
  28. AceMaster

    AceMaster Three Time F1 World Champ

    Feb 6, 2009
    31,218
    Ontario, Canada
    Full Name:
    Mike
    I didn't think so either, which is why I was surprised by the content of this thread.

    Exactly, good point.
     

Share This Page