Advice on tax implications of selling and buying a car? | Page 2 | FerrariChat

Advice on tax implications of selling and buying a car?

Discussion in '348/355' started by [email protected], Jul 20, 2021.

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  1. 19633500GT

    19633500GT F1 World Champ
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    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. Natkingcolebasket69

    Natkingcolebasket69 F1 World Champ

    If u trade In through a dealer u are good


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  3. plastique999

    plastique999 F1 Veteran
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    I need to do this


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  4. plastique999

    plastique999 F1 Veteran
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    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)


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  5. Natkingcolebasket69

    Natkingcolebasket69 F1 World Champ

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


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  6. Culprit

    Culprit Formula Junior
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    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.
     
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  7. Alcav5

    Alcav5 F1 Rookie
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    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.

    :)
     
  8. Innovativethinker

    Innovativethinker F1 Veteran
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    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.
     
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  9. plastique999

    plastique999 F1 Veteran
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    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


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  10. Natkingcolebasket69

    Natkingcolebasket69 F1 World Champ

    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


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  11. ttforcefed

    ttforcefed F1 World Champ
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    i wld think car youtubers are writing off the cars as work expenses...not registering them in their personal names etc...
     
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  12. Natkingcolebasket69

    Natkingcolebasket69 F1 World Champ

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


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  13. ttforcefed

    ttforcefed F1 World Champ
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    gotta pay to play
     
  14. Natkingcolebasket69

    Natkingcolebasket69 F1 World Champ

    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


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  15. ttforcefed

    ttforcefed F1 World Champ
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    i just do the same as i do with my stocks, houses, etc...never sell anything, ever
     
  16. ShineKen

    ShineKen F1 World Champ
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    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.
     
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  17. ShineKen

    ShineKen F1 World Champ
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    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.
     
  18. randkin

    randkin Formula 3
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    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.
     
  19. AceMaster

    AceMaster Three Time F1 World Champ

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    You get taxed for capital gain if profiting on a car sale?
     
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  20. emac

    emac Formula Junior
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    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.
     
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  21. johnk...

    johnk... F1 World Champ
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    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.
     
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  22. johnk...

    johnk... F1 World Champ
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    NO. Ordinary expenses like insurance, normal maintenance,... can not be applied to increase the basis.
     
  23. jjtjr

    jjtjr Formula Junior

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    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.
     
  24. OCKlasse

    OCKlasse Formula Junior
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    I’m almost certain Manny has a dealer’s license.
     
  25. AceMaster

    AceMaster Three Time F1 World Champ

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    I didn't think so either, which is why I was surprised by the content of this thread.

    Exactly, good point.
     

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