Tax implications from selling car received as gift

Discussion in 'Tax' started by levinka, Nov 14, 2005.

  1. levinka

    levinka Guest

    I received a car from my brother earlier this year as a
    gift. I now want to sell the car, and I am curious if I
    will have to pay capital gains or any other kinds of taxes
    on the sale of the car.

    My brother transferred the car to me as a gift valued under
    $11000, I paid a title transfer fee and ad valorem tax in
    GA. The value of the car is now somewhere around $9000.

    TIA,
    Ken
     
    Last edited by a moderator: Jan 23, 2018
    levinka, Nov 14, 2005
    #1
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  2. levinka

    Herb Smith Guest

    I gather you have never sold a car before :)
    Your "cost basis" is either what your brother paid for the
    car or (more likely) the FMV of the vehicle at the time of
    the gift. Automobiles, with rare exceptions, always decrease
    in value, not increase. Current value of the car, or what
    you sell it for, is doubtless less than what it was worth
    earlier this year, resulting in a capital LOSS, not a gain.
    Losses on "personal use" assets (like cars and houses) are
    NOT deductible.

    Bottom line? You will owe no taxes, or even have to report
    the sale on your tax return. Make sure that the sale is
    reported to the state, so that your future liability is nil.
    The buyer will be responsible for paying the use tax,
    registration fee and ad valorem tax when he/she registers
    the vehicle.
     
    Last edited by a moderator: Jan 23, 2018
    Herb Smith, Nov 16, 2005
    #2
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  3. levinka

    Phil Marti Guest

    Gifts come with the donor's basis. Since you're selling it
    for less than he paid for it, you have nothing to report on
    your return unless you've used this car in business and
    taken deductions for it.
     
    Last edited by a moderator: Jan 23, 2018
    Phil Marti, Nov 16, 2005
    #3
  4. levinka

    Bill Guest

    asked:
    First, you owe no tax on a gift, but the gift brings along
    its value, so whatever it was worth upon receipt would be
    your cost basis.

    With the exception of "classic cars," it is almost
    impossible for autos to _appreciate_. Therefore, whatever
    you will be selling the car for, will be less than the
    original cost basis.

    Therefore, unless it's an exceptional case, proceeds from
    sale will not represent a gain; ergo, no tax due (and don't
    even bother to report it on your return).

    Bill
     
    Last edited by a moderator: Jan 23, 2018
    Bill, Nov 16, 2005
    #4
  5. Assuming it was worth less when he gave it to you than he
    paid for it, the cost basis you should use for calculating
    capital gain is his cost, and the cost basis you should use
    for calculating capital loss is the value on date of gift.
    Since this is personal use property, you cannot gain any tax
    advantage if tis results ina loss. If a gain, then it is
    taxable income to you. But to be a gain, your sales price
    has to be more than his cost basis. Not too likely. So
    chances are you have no gain or loss to be concerned with.

    __
    Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
     
    Last edited by a moderator: Jan 23, 2018
    Arthur Kamlet, Nov 16, 2005
    #5
  6. levinka

    Missy Guest

    You will not have to pay tax on any gain if you don't have
    any gain. If you sell it for $9K and it was worth $11K when
    he gave it to you, you have a loss and it sounds like a
    personal loss to me. Only if it was used for your business
    would it be a capital loss.

    Missy Doyle
     
    Last edited by a moderator: Jan 23, 2018
    Missy, Nov 16, 2005
    #6
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