Tax implications from selling car received as gift


L

levinka

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
 
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H

Herb Smith

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.
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.
 
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P

Phil Marti

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.
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.
 
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B

Bill

(e-mail address removed) asked:
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.
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
 
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A

Arthur Kamlet

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.
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
 
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M

Missy

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
 
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