If you’re selling your car for less than what you paid, you likely won’t need to pay any sales tax because the Internal Revenue Service (IRS) considers selling a used car for less than what you paid a capital loss. However, if you’re selling your car for more than what you paid (like if it’s a classic car you’ve restored and it’s increased in value), you may need to pay sales tax.
If you’re buying a car from a private seller, you may need to pay sales tax, but this sales tax doesn’t go to the seller – it goes to the Department of Motor Vehicles and is part of your car’s registration.
This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.
Tip adapted from CarGurus9
Footnotes and Sources
- cargurus.com, May 8. 2024
