I'm getting ready to sell my '90 and need an answer if anyone can provide
one. Is there a way to sell a car privately in PA and put the money in
some sort of account so that it will not be considered income this year?
Maybe a deferred payment/account of some kind for tax deferrment until
selling a car shouldn't be considered 'income' anyway, since you most likely
will be selling it at a 'loss' from its original price. But having lived in
Pa for a few years I know Pa "tax laws" are a bit unusual from the rest of
I don't know PA law, but I am hoping there is enough sense in it to
recognize that the State can't tax the buyer and the seller both on the same
exchange of money/property. When the buyer transfers the ownership, he will
pay taxes on the amount he reports as the purchase price. I don't believe
you will also be taxed or even need to report that same amount and subject
it to a second taxing.
I don't understand why a state would be entitled to any money made on a car.
If there is a law saying if you make money on a car, the other edge of that
law would give you a deduction for any money lost when selling a car (?)
How many people actually make money when they trade in ?
I think this is a loosing proposition for the state if it is in fact true.
Now if your business is buying and selling autos the that is different.
Also any hobby, if not used as a deduction would not qualify as income
I really would like to hear more about this supposed PA law, if anyone
really knows the truth
In many states the buyer pays the "sales or use tax" on the purchase
cost of the vehicle. That is frequently the amount due after trade-in
allowance. In states that have personal income taxes, the "Seller" pays
taxes on the "profit or net gain" of the sale (he originally bought it
for 15,000, sells it for 20,000, pays income tax on 5,000) Two different
taxing mechanisms. One considered a "user fee" and the other is an
Governments do it all the time. You buy an item at the store, pay a
sales tax, and the business pays a profit tax. Not to mention the 50
times before it made it to the retail store that the item was taxed.
Well not quite - the profit each entity realized on the item is taxed,
not the total value of the item each time it changes hands.
Here's waving to ya - \||||
'67BB & '72BB
-- not affiliated with JLA forum in any way -- alt.autos.corvette is
original posting --
"To know the world intimately is the beginning of caring."
-- Ann Hayman Zwinger
BDragon, wrote the following at or about 9/23/2006 9:36 PM:
There's enough sense there that they will get whatever taxes they can.
Probably only going to be ONE tax collected on the direct transaction
but... Think about it a minute. I have a '90 that I "stole" for a mere
$2,000 because the previous owner spilled a cup of coffee on the console
and the tires were dirty<g>
You come along and want to by this pristine '90 with the coffee cleaned
up and a new set of skips on it (actually, I just washed the tires and
put some dressing on them)and pay me $13,000 for this car.
Now, depending on how they assess the tax, the buyer (you) will be
liable for tax on the $13,000 purchase price. This likely will be
categorized as a sales tax.
For my part, even though I am not a dealer, I have realized a profit or
income of $11,000 (less the cost of cleaning up the car and tires for
sale). If PA has an income tax and I'm honest, they will get their bite
of my $11,000 profit as will the feds.
This is probably the exception since most itinerant sales of cars result
in a "loss."
Remember... the subject line has to do with taxable income, not sales tax.
Brings up another question.
In California, a private party records the selling price on a "report of
sale" that's sent to the DMV within 10 days. This report gets the
seller off the hook for traffic tickets and financial responsibility.
The selling price is checked against the purchase price the buyer
reports to assess the sales tax on the transaction.
What isn't mentioned is whether there is a "sales price history" for
every used car in the state. Anyone know if that data is kept and how
it's used? (i.e. is it reported to the Franchise Tax Board -- the state
income tax folk?)
'89 Hookercar '02 e-blu coupe
I appreciate all the comments and perhaps clouded the issue by mentioning
my state. I really don't think there is anything PA will need from me,
I'm more concerned and interested in the IRS and my tax statement for
this year. Will the selling amount be considered income that should be
reported on income tax for 2006?
Federal is easy. It's not income unless you are in the business of
buying and selling cars and held the 'vette as business inventory (like
on a schedule C). Or, you are a collector and the car appreciated in
value. Or, you used the car in a business and wrote off depreciation on
prior tax returns. Or, you rented the car out etc....
I think this is correct. If you have been depreciating the vehicle, then
you might have to claim capital gains on the sale. Or if you have sold
enough vehicles to qualify as a dealer, or if you charged it off as a
business expense. Other than that, I wouldn't claim it all.
Also, the fact that was mentioned above about a possible gain having to be
balanced by a more likely capital loss every time a car is sold is probably
the only reason the IRS hasn't been taxing this somehow. The number of cars
that actually return a profit has got to be miniscule compared to the 98
percent that constitute a loss.
If it hasn't been on a depreciation schedule, I can't imagine the IRS would
be involved in any fashion with this.
It's like you selling your grandfather's pocket watch. It cost him $2 and
you sold it for $200, but I don't believe the IRS becomes involved in that
transaction in any way.
Right. In PA, there is a sales tax form that must accompany all car sales
making it impossible for the buyer to escape paying. Not a bad deal for
the state in that every time the car is sold, sales tax is collected.
This could be a one time deal or a dozen, each time, more sales tax. It's
possible that the car's value could be overshadowed by the amount of
sales tax it generated over time.
Not a bad deal for them.
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