Have problem with selling of furniture

[thompsonson5]

Hello everyone, I want to sell the furniture from the apartment to another person. I was told that I needed to conduct an agreement. I read that in that case, I will have to pay taxes.
But I wouldn't want to pay tax for just selling a nightstand.
Is there any way out of this situation or is it possible not to draw up this contract?
I will be grateful for the answer!

 

[LdiJ]

Hello everyone, I want to sell the furniture from the apartment to another person. I was told that I needed to conduct an agreement, something like this https://lawrina.com/templates/bill-of-sale-template/. But I read that in that case, I will have to pay taxes.
But I wouldn't want to pay tax for just selling a nightstand.
Is there any way out of this situation or is it possible not to draw up this contract?
I will be grateful for the answer!

It is not necessary to use a bill of sale when selling something like that. You simply sell it as is, for cash.

 

[thompsonson5]

Oh, I wanted to hear it, thanks for the reply. I thought I should use a bill of sale, although it sounds weird because it's not a house sale or anything like that.

 

[Zigner]

"I was told..."

By whom?

 

[thompsonson5]

People I want to sell it to

 

[adjusterjack]

If the buyer wants a bill of sale there's no harm in giving one.

Prepare two copies, each of you signs both, you keep one.

Make sure the bill of sale says "as is, no warranties or guarantees, express or implied."

I don't see an actual template at that link you provided.

Doesn't have to be complicated. Just describe the items briefly and the price.

Cash only. And make sure the buyer has an appropriate vehicle with him. You don't want to be holding his furniture after he pays you for it.

You might want to photograph the items before they leave. That way there's no question about condition later.

 

[Taxing Matters]

Giving a receipt or bill of sale does not by itself make you in the business of selling anything and doesn't determine the tax consequence. Selling your own home furnishings in something like a yard sale usually doesn't result in any taxable income. You'd have to sell it for more than you paid for it to owe any tax. And you'd owe tax only on the gain, and that gain would be required to be reported on your tax return even if you weren't in the business of selling that stuff. The loss you incur on the sale of your own home goods is not deductible so there is no need to report that on on your return. No state requires you to collect sales tax on the sale of used personal property. However, if you were in business selling that stuff sales tax may be a concern.

When selling used goods that are worth more than a small amount it is a good idea to do a bill of sale for it to reduce the potential for disputes over the sale later on. Documenting the condition of the items is a good idea too. Jack gave you some good ideas on how to make these kinds of casual sales go more smoothly. You don't want the hassle of small claims court over the sale of some used furniture, after all.

 

[adjusterjack]

The loss you incur on the sale of your own home goods is not deductible

Hardly seems fair that one pays tax on gains from sale of personal property, hobbies, cars, etc (if there are gains) and can't deduct capital losses on them.

I know.

Fair is where you go on rides and eat cotton candy.

Taxes aren't.

 

[LdiJ]

Hardly seems fair that one pays tax on gains from sale of personal property, hobbies, cars, etc (if there are gains) and can't deduct capital losses on them.

I know.

Fair is where you go on rides and eat cotton candy.

Taxes aren't.

Actually, in this case it probably is closer to fair than in many cases. I would say that 95% or more of the people selling used property are taking a loss on it. (Selling it for less than they paid for it originally). Anything that someone buys, knowing that it will increase in worth rather than decrease with use, is generally an intent to make a profit.

 

[adjusterjack]

Anything that someone buys, knowing that it will increase in worth rather than decrease with use, is generally an intent to make a profit.

Not necessarily.

I bought a brand new car in 2020. Because of the recent craziness of used car prices I may actually be able to sell it for a few thousand more than I paid for it since it has less than 2000 miles on it.

When I bought the car there was no intent to make a profit nor did I foresee the craziness in used car prices.

 

[Taxing Matters]

Hardly seems fair that one pays tax on gains from sale of personal property, hobbies, cars, etc (if there are gains) and can't deduct capital losses on them.

There is a good tax policy reason for it. If the loss on your personal use property (your home furniture, etc) were deductible then the government would be subsidizing your personal living expenses. It is unusual to have a profit on the sale of such items, but when there is a profit, the government wants its share of that. While it makes sense in the realm of tax policy, whether that's "fair" is another matter.

I know.

Fair is where you go on rides and eat cotton candy.

Taxes aren't.

Taxes are some of the most commonly debated laws in Congress, state legislatures, and local governments. The rules you get depend greatly on whom the tax affects and how hard those affected persons lobby those legislative bodies and the tax agencies that enforce them. Most of the public does not care to learn much of the details of the taxes they pay, but they should since that directly affects what they have to spend on other stuff. If the general public were more active in making their views known on tax proposals they might get rules more to their liking. With tax law, not everything makes logical sense (though much of it does). Thus, you have to simply the know the rules rather than just applying logic, or consult a tax professional to advise you. For federal income tax, the IRS has a huge wealth of information in its publications to help people understand their obligations. The IRS lists its current publications here: https://www.irs.gov/publications

 

[Taxing Matters]

When I bought the car there was no intent to make a profit nor did I foresee the craziness in used car prices.

The dealer that sold me my new car in 2018 sends me offer letters nearly every month to buy my car. The offers wouldn't make me a profit on it, but I'd get a lot more for it than I would have pre-pandemic. The car market right now is nuts. My car has very low mileage and is in great shape, so I plan to hold on to it for quite awhile. I'm not one of those that itches to upgrade every 2-3 years as some do.