You ask, what are my tax liabilities if I sell my car online or otherwise? You do not have to report vehicle sales on your tax return unless you sell a vehicle for more than its original purchase price. In all other instances, sold vehicles are considered capital losses because the seller does not make a profit.

Vehicles are Capital Assets

The only time a vehicle owner is liable to report income on a vehicle sale is when profit is made from the sale. For example, an old junk car with new parts installed that gets sold as a refurbished car for more than the original purchase price plus parts would be a taxable asset.

However, since vehicles are depreciating capital assets, there might still be no tax liability even if the car has had repairs done or accessories installed. Depreciation can and should be taken into consideration when determining whether the vehicle was sold for profit or at a loss.

Another instance when a vehicle owner is liable for paying taxes on a car sale is in the case of classic collectable cars, which generally appreciate in value over time.

Are There Tax Benefits to Trading Used Cars Instead of Selling?

In some states, new car buyers can enjoy tax benefits by trading in their old cars. Used car dealers frequently use this information in their sales pitches. In the states where these benefits apply, they work by reducing sales tax on the car being bought—not reducing capital asset tax on the car being sold.

Unscrupulous dealers often use vague language to blur the lines between these two types of tax benefits. A typical situation involves the dealer making a low-ball offer and then framing it as a great deal because the customer would lose a lot of money paying taxes on the car if sold privately.

Not only is that not true, it constitutes a violation of the customer’s trust and should be reported to the Federal Trade Commission. The FTC’s Bureau of Consumer Protection pursues and litigates against businesses that misrepresent tax code for their own benefit.

What's Your Car Worth?

Call 1-855-437-9728 of if you prefer to receive a quote online you can do so here:

You can find great deals on car parts at a salvage yard near you.

Auto Junkyards Near Me That Sell Car Parts

By Alyssa | August 27, 2018

Auto junkyards and salvage yards are an excellent source of affordable car parts. If you have a discerning eye and you’re a bit handy, learn to make use of your local salvage yard and save a ton of money on expensive car parts and repairs. While we don’t deal parts, the majority of auto salvage …

Auto Junkyards Near Me That Sell Car Parts Read More »

Agree to offer

Sell My Junk Car For $500 – Who Buys Junk Cars for Cash Near Me

By Felix Maxwell | February 27, 2018

  So it’s time —  or even past time –- to sell your junk cars for cash.  But you really need a good price for it, even if it’s an old car.  Maybe you want to put that towards a new car. Or you’ve got another big purchase to make. Or bills to pay off. Or …

Sell My Junk Car For $500 – Who Buys Junk Cars for Cash Near Me Read More »

There are several common auto salvage yards you should always watch out for.

Auto Salvage Yards Near Me: 10 Crooked Scams Salvage Yards Pull When Buying Cars

By Felix Maxwell | February 15, 2017

Last Updated: September 21, 2017 Let’s be real: Auto salvage yards don’t have the best reputation, right?  If this is your first time doing a search for auto salvage yards near me then you may not know that. Most people think junk car buyers are shady and are out to scam them, and often times that’s …

Auto Salvage Yards Near Me: 10 Crooked Scams Salvage Yards Pull When Buying Cars Read More »

junk car sale prices for scrap

Scrap Car Prices: Are You Getting The Right Value For Your Scrap Car

By Felix Maxwell | October 1, 2016

Last Updated: October 1, 2016 Are you wondering – “How much is my car worth in scrap?” If you’ve received one or more quotes from salvage yards for your unwanted car, you might wonder if you’re getting the best scrap car price possible. Selling an unwanted car to a salvage yard doesn’t happen very often …

Scrap Car Prices: Are You Getting The Right Value For Your Scrap Car Read More »