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Old 10-24-2008, 08:19 AM
 
Location: Beautiful NH
107 posts, read 204,481 times
Reputation: 57
Default Paying taxes on the sale of a classic car?

i recently sold a very rare early car and got over $40K for it. how does this affect me come tax time? will i have to pay capital gains or???? any help would be appreciated.
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Old 10-24-2008, 08:52 AM
 
30 posts, read 64,226 times
Reputation: 24
check out www.1031x.com it talks mostly about realestate by they have a section on asset sales gain
an 888 no. and a ask a question section...hope it helps
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Old 10-24-2008, 09:02 AM
 
Location: Orlando, FL
959 posts, read 1,329,649 times
Reputation: 352
Yes, you'll have to pay capital gains when you file your taxes early next year. On your tax return, there will be a section based on other income and capital gains. I've used Turbo Tax (not the free version.. the $29 or so version on their site) in the past to handle these types of transactions with ease. The rate depends if it was a long-term or short-term gain. Did you own the car for over a year? Then it qualifies as a long-term capital gain. Otherwise it's short-term, and rates are usually higher. It also depends on your salary.. check Internal Revenue Service for current rates, but in 2008, if you made $32,550 (including the sale of the car) or less, you pay 0% on long term capital gains. Since you stated you made over $40k on the car alone, you're likely paying 15% on it if you owned it for at least a year.. so $6,000. If you owned it for less than a year, it goes at your current income tax rate for your salary, but collectibles are capped at 28% capital gains tax even if your income bracket has a higher tax rate. As a side note, be glad you already sold the car, as Obama has stated quite frequently he wants to increase capital gains from 15% to 28%.. so sell your collectables now if you want to avoid that rate on long-term items. Under his plan, you'd be paying forth $11,200.
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Old 10-24-2008, 10:03 AM
 
3,460 posts, read 2,269,124 times
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Don't forget to subtract all the costs of holding the car. Insurance, tags, detailing, repairs, etc.
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Old 10-24-2008, 03:18 PM
 
Location: Orlando, FL
959 posts, read 1,329,649 times
Reputation: 352
Quote:
Originally Posted by sterlinggirl View Post
Don't forget to subtract all the costs of holding the car. Insurance, tags, detailing, repairs, etc.
And you need receipts for everything. The IRS is not friendly during an audit.
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Old 10-24-2008, 03:41 PM
 
7,884 posts, read 19,810,957 times
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When I sold a few of my collectible motorcycles, my accountant would only let me declare/deduct the actual costs of purchase, repairs/restoration, advertising, and crating & shipping of the bikes to the sale price.

Insurance, storage in my home garage, license fees (which included annual property taxes on them based upon the original documented sales price) were not allowable deductions to my net profit. I detailed the bikes myself and couldn't get any deduction there.
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