Does selling your old car count as income and do you have to pay income tax on that?

In: Car Selling, Income Taxes [Edit categories]

If the car has been used in a business and been depreciated, you must report the sale on Form 4797 and calculate any gain or loss. A gain would be taxable; a loss may be deductible against your other income.

I would add that a sale of a personal vehicle can result in tax being owed, but that is a rare situation. For the vast majority of cars, the selling price is less than what the owner paid for it. Losses on the sale of personal property are not deductible, but gains from such sales are taxable. If you happened to be fortunate enough to buy a car which became a classic and increased in value, you would have a reportable capital gain.

First answer by anonymous. Last edit by Jancpa. Contributor trust: 26 [recommend contributor]. Question popularity: 169 [recommend question]

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