[Spool]

I been finding cheap cars on Craig's List, buy it, and then relist it for higher, same with motorcycles...i mean when i buy them i drive for awhile and actually register it and insure it and pay taxes to get plates...


so is it illegal to keep doing this? I did a search on google and didn't find anything...? someone can chime in?

[TurboFan]

Different states have limits before you are considered a dealer. My neighbor ran afoul a few years back, had to prove he wasn't a dealer, but had to pay some fees.

[MadDog]

If you're making a profit, then it's a capital gain, which is taxable.

Illegal ?? No.

Not declare your profit on your taxes ?? Fraud.

My .02.

[Spool]

up to date i have sold over 10 cars and bikes in the last 2 years...


i dont see why it's a problem, i do pay taxes when i register it so not like im dogging the IRS..

[Davinhci]

There is a limit, check with the laws of your state.

[Spool]

been searching all day, failed...i live in VA...any search Gurus wanna help me?

[MadDog]

Originally Posted by Spool

up to date i have sold over 10 cars and bikes in the last 2 years...


i dont see why it's a problem, i do pay taxes when i register it so not like im dogging the IRS..

As TurboFan stated, you may be considered a dealer by your state, and may need a business license.

[PaulBailey@ltbmw]

Mind me asking about how much profit you've made doing this in the past two years?
You can PM me.

[JesusFrEAk]

you do need a license to resell cars. I believe in Texas the limit is 5 cars without any licensing. You need a DMV. Go to your local DPS and they can provide the info on the limit of cars you can sell each year without getting into trouble . Other than that it doesnt matter if you pay taxes on the cars or if you file them in your income tax, states require you to obtain certain licenses and pay the fees neccessary to do that type of business.

[Spool]

Thanks Jesus, that sounds accurate..i will find out from DMV tomorrow about it...

[DougLikesBMW]

Why do you have to pay taxes for that kind of income? Sounds stupid...

I say just keep doing what you're doing...who's gunna catch you?

[K330i]

Originally Posted by TurboFan

Different states have limits before you are considered a dealer. My neighbor ran afoul a few years back, had to prove he wasn't a dealer, but had to pay some fees.

if you buy and sell that much it might be in your best interest to get a dealer license. you would pay less (if none at all) taxes when you register the vehicle. not to mention no more tags to worry about (dealer tag).

ask about the dealer fees and compare to what you've been paying in sales tax and it will probably be less.

[quest556]

Try the Va Motor Vehicle Dealer board for more info on what qualifies as a dealer..
http://mvdb.vipnet.org/

[e90AW335i]

Originally Posted by DougLikesBMW

Why do you have to pay taxes for that kind of income? Sounds stupid...

I say just keep doing what you're doing...who's gunna catch you?

What? Are you asking why you have to pay taxes on capital gains?

errr.....Because it is the law.

Who's gunna catch you?

errr....The IRS when you sell the car to someone else and they see you owned it last.

Can you please think out what you type before you type it. I think you just made everyone a little dumber with your statement.

[ideliver]

You seriously should consider getting a dealers license...the state loves you (assuming VA has sales taxes on cars) because of all the taxes you are paying...if you were to get a dealers license...no sales taxes paid by you (varies by state)...just the dealers license fees....PLUS...you will save on your insurance rates...

You seriously should research this...

[Spool]

I just did a quick researching on obtaining a dealer's license...it says i have to have an office, and space to store the cars. at least 300 feet worth of parking and stuff...there must be some loop holes but that's one of the requirements...this is just a hobby, or sidejob if you will, i don't plan on doing it to put food on my table.

[bubbletea 4 me]

i dont see a problem in this if this is a "hobby" of yours. im not clear with the law but why would the IRS care how many cars you owned? you like cars and you have the means for it, then more power to you. when you sell your car, you may or may not have a gain, but how can IRS control how much you wnat o sell the car for? you sell for as much as a buyer is willing to buy, right? that's just how i see it.

[TurboFan]

IRS doesn't give a shit about how many cars you buy and sell. It is the state's duty to regulate business. The IRS just cares that you pay the proper tax. The state will become suspicious if you are buying and selling too many cars, and may come a knocking to see what is going on.

So you may need to meet some requirements to get a dealers license. If you want to buy and sell enough cars that the state considers you a dealer, you must then do one of two things:
1. Get a dealers license.
2. Stop conducting business without a license
There is probably a loop hole for hobby dealers, but I would imagine you would have to register.

Consider this:
Someone may have the knowledge and the ability to be a general contractor. But without a contractors license, which has specific requirements regarding training and knowledge as well as the passage of an exam, that person must not advertise or promote themselves as such, and may not hire themselves out to do contract work as defined by the state code. Same concept.

[BMWE90]

I'm not sure about your particular state but I believe that there is a law in every state limiting the number of cars you could sell per year. I think in FL, for example is something like 5 or 7 cars. If you sell more than that you will need to get a used car dealer license. I took a course on this last year and passed the test but I never followed through with opening a used car dealer/business. You should be able to find out more info by searching online.

[DougLikesBMW]

Originally Posted by e90AW335i

What? Are you asking why you have to pay taxes on capital gains?

errr.....Because it is the law.

Who's gunna catch you?

errr....The IRS when you sell the car to someone else and they see you owned it last.

Can you please think out what you type before you type it. I think you just made everyone a little dumber with your statement.

I asked that because he is just making that profit through his hobby.

I mowed lawns during summers and never paid any taxes...Granted that is not on the same profit level as selling cars...but same concept...

So if someone has an old car that they restored and is going to sell it privately to someone for profit they have to pay taxes on that profit?

[TurboFan]

Originally Posted by DougLikesBMW

I asked that because he is just making that profit through his hobby.

I mowed lawns during summers and never paid any taxes...Granted that is not on the same profit level as selling cars...but same concept...

So if someone has an old car that they restored and is going to sell it privately to someone for profit they have to pay taxes on that profit?

supposed to, but you can usually deduct the cost of the restoration.

[epbrown]

Originally Posted by Spool

so is it illegal to keep doing this? I did a search on google and didn't find anything...? someone can chime in?

In most states, you can sell 5 cars a year without applying for a dealer license, but you should call your DMV and ask about VA's specific laws.

You can get away with selling any number indefinitely if you buy and sell the cars one at a time, I'd wager. What typically gets people in trouble is having/parking a lot of cars around their residence, which leads to the neighbors reporting them. Rob Seigel in Roundel magazine was reported as an unlicensed dealer by a disgruntled neighbor because he had 5 cars at his house; they were his various projects, not for sale, but it was a hassle proving that. In the end, I think he was forced to get rid of a couple.

Another way to get caught is a disgruntled buyer. There are a lot fewer protections for buyers in private sales, so if the buyer knows you sell a lot of cars it's in their interest to get you classed as a dealer to give their complaint more weight.