Making a profit from car sale - Tax implications

xabi

This may not be the best place to ask this but, if you make a profit from a car sale, say 2K, what are the tax implications? Is it subject to CGT?

X.

Kinetic^

If you are a car salesman, then it could be subject to income or corporation tax.

If you mean by private sale then there is no CGT liable on the gain.

xabi

Thanks Kenny,

Yes, its private, somthing i plan on doing every 6 months or so.

X.

kluivert

I think that the VRO are taking details of your PPS No. to send you out a form 11 (income tax return) if you take in so many cars within a year.

Might be a dity rumour though.

Kinetic^

As Kluivert says, be careful or you'll have someone knocking on your door.

Biro

You'll really have a hard time convincing them if it's a frequent occurance of a 2nd car lying about your premises and for sale. But if you just happen to sell your own personal car every 6 months and happen to sell it for more than you bought it for, then would that be considered legit?

mickjohnlong

if its not a uk car what has it got to do with the vro unless this started on another one it does not mention anything about a uk car

xabi

It will be my primary car that i will drive for a while and sell on. I may or may not import the car, so VRO dont need to know.

X.

ondafly

AFAIK - if you sell more than 5 cars in one year, you are liable for tax, otherwise you should be ok. I don't have any links to this, just something I must have read somewhere

mickjohnlong

if its not an import and your not in the vro every second week/month should be a problem

Henry Ford III

A lot of clueless postings here.

If making a profit on buying and selling cars is done "in the nature of a trade" i.e. you are trading in car sales, then it's subject to tax.

The number of transactions are immaterial. A land holding company may not necessarily make any purchases or sales in a year, but are still trading.

O.P. said "Yes, its private, somthing i plan on doing every 6 months or so."

I would imagine that's an intent to trade.

Tipsy Mac

ondafly wrote:

AFAIK - if you sell more than 5 cars in one year, you are liable for tax, otherwise you should be ok. I don't have any links to this, just something I must have read somewhere

Heard similar myself. It's kind of strange, if anything they should be encouraging it as it's nice cash for them for providing the reg plate. There's no way to prove how much a person makes or looses on the sale of a car so if someone wanted to they could sell 50 cars in a year making over a grand on each and then sell a BMW M3 to their mate for €1.37 and that loss would cover the tax implications on the rest

xabi

Henry Ford III wrote:

O.P. said "Yes, its private, something i plan on doing every 6 months or so."

I would imagine that's an intent to trade.

How is it? I know alot of people who change their car yearly or less (although most dont make a profit). I am doing this as a hobby more than a side earner and wouldnt be too botherd if i only made a few quid. I just dont want the few quid i make be subjected to tax.

X.

SGKM

One of the few things that I remember from my tax course in college last semester is that someone in your position (ie you arent selling cars as a trade) will definately not be liable for cgt on the sale of that car!

the revenue see motor vehicles as wasting assets so they are cgt exempt, so in your case i'm 100% sure that you arent liable for cgt!

Henry Ford III

xabi wrote:

How is it? I know alot of people who change their car yearly or less (although most dont make a profit). I am doing this as a hobby more than a side earner and wouldnt be too botherd if i only made a few quid. I just dont want the few quid i make be subjected to tax.

X.

Take that one up with the Revenue if you wish.

If you buy and sell cars every 6 months with a view to making a profit, my view is that's trading, and any profit from that is subject to income tax.

Any loss you make would be allowable however and any expenses you incur in the carrying on of that trade would be allowable.

Cyrus

to be fair its a moot point, you'll do well to buy a car drive it for 6mths and make any cash, you might not lose anything but making cash is very unlikely

Kinetic^

Henry Ford III wrote:

Take that one up with the Revenue if you wish.

If you buy and sell cars every 6 months with a view to making a profit, my view is that's trading, and any profit from that is subject to income tax.

Any loss you make would be allowable however and any expenses you incur in the carrying on of that trade would be allowable.

Here's the thing, if he drives the car for 6 months then sells it on and makes a profit then it's not trading.......this is what he plans to do. If he buys a car and sells it within a week, then it would be trading. Simple example I know but this situation is not black and white.

overdriver

How is anyone to know what he makes on each car, assuming that some will be sold for cash? It would be far simpler to declare SOMETHING at the end of the year and pay tax on that, than have someone knocking on your door looking for financial records one day.

Given that any imnprovements you make to the cars can be offset against the profit, you would end up paying very little, and not be looking over your shoulder.

Kinetic^

Well the fact that there's an ownership document to be filled out means that they've got the buyer and seller right there........if they ask both how much it cost and it don't match, it'll probably be the seller that's lying.....giving the revenue suspicious thoughts.

maidhc

Henry Ford III wrote:

Take that one up with the Revenue if you wish.

If you buy and sell cars every 6 months with a view to making a profit, my view is that's trading, and any profit from that is subject to income tax.

Any loss you make would be allowable however and any expenses you incur in the carrying on of that trade would be allowable.

I am struggling with Irish Taxation Institute examinations at the moment. This seems to be as good as a textbook definition.

Kinetic^

Also, more food for thought......you know the way all the tax returns have been enabled to submit them online? Well has anyone heard of any redundancies been made by the Revenue? NO.......all the staff that used to process the returns are being ploughed into doing audits so if you think that this seems like a hassle free of making money, sooner rather than later, you'll get nabbed.

I know I've said that it's not black and white, but if your name keeps appearing on vehicle certs then you can be sure you'll get a knock on the door.

Biro

But why would you have to pay tax on selling your own car? At most you will only get a few hundred profit, and if the car is making a few grand profit then it must be priced in the mid-20s in order to return a profit like that, hence could actually take 6 months to find a buyer anyway, so you'll be doing well to sell 2 cars a year, each of them your own, so I doubt you'd be likely to fall under the trading rules.
Sure selling your dwelling house isn't suceptable to taxation, and everyone sells those for a massive profit!

GrumPy

Kenny 5 wrote:

Also, more food for thought......you know the way all the tax returns have been enabled to submit them online? Well has anyone heard of any redundancies been made by the Revenue? NO.......all the staff that used to process the returns are being ploughed into doing audits so if you think that this seems like a hassle free of making money, sooner rather than later, you'll get nabbed.

I know I've said that it's not black and white, but if your name keeps appearing on vehicle certs then you can be sure you'll get a knock on the door.

Advice from you, is about as helpful as a hefty dose of herpies!!!

maidhc

Biro wrote:

Sure selling your dwelling house isn't suceptable to taxation, and everyone sells those for a massive profit!

There is a particular exemption for your principal primary residence.

Kinetic^

Irish GrumPy wrote:

Advice from you, is about as helpful as a hefty dose of herpies!!!

FYI, it's spelt herpes.....now get back to school ya shirt lifter!!!!!

overdriver

There is doubtless a certain number of sales per annum that will "flag" you as being worthy of an audit. You might be ok, but who knows? Better to be safe, no?

unkel

Irish GrumPy and Kenny 5, stop the fighting and back on topic please

PauloMN

Can't see where the confusion arises here to be honest.

The OP is just going to be like any punter selling his own car, except a bit more often. He is not liable for tax as he is selling a car he has owned privately.

A dealer is a trade, and a dealer can buy a car and hold it without becoming an owner in the sense that a private person would i.e. a dealer doesn't go on the VLC. The OP will be named on the VLC of each and every car, and will buy/sell them himself.

Audits, knocks on doors.... get real guys.

Henry Ford III

Kenny 5 wrote:

Here's the thing, if he drives the car for 6 months then sells it on and makes a profit then it's not trading.......this is what he plans to do. If he buys a car and sells it within a week, then it would be trading. Simple example I know but this situation is not black and white.

Length of ownership is irrelevant.

Think of a business with low stock turnover rate. A jeweller may only sell his highest value items perhaps less frequently than 6 monthly, but he's still trading.

Henry Ford III

maidhc wrote:

I am struggling with Irish Taxation Institute examinations at the moment. This seems to be as good as a textbook definition.

Been there, done that. Tough exams.

Thanks

Henry Ford III

PauloMN wrote:

Can't see where the confusion arises here to be honest.

The OP is just going to be like any punter selling his own car, except a bit more often. He is not liable for tax as he is selling a car he has owned privately.

A dealer is a trade, and a dealer can buy a car and hold it without becoming an owner in the sense that a private person would i.e. a dealer doesn't go on the VLC. The OP will be named on the VLC of each and every car, and will buy/sell them himself.

Audits, knocks on doors.... get real guys.

Private ownership is irrelevant.

Yes a dealer who sets himself up a such obviously is trading, but the O.P.
quite clearly asked would profits from frequent purchases and sales be taxable.

My view is that this is likely be seen as trading, as the intent was to move cars with a view to the realisation of a profit.

The fact that his/her name might appear on log books is a side issue.

Whether or not such profits would fall into the tax net or not is another issue entirely. Self assessment is the law btw. It's not up to Revenue to catch anyone.