Do You Have to Pay Taxes When You Sell a Company Car?
When you buy or sell a car – taxes are always a concern. Birmingham area drivers have asked – do I need to pay taxes when I sell my car – and we have helped provide answers at The Car Depot. Business owners in the area have similar questions and want to know – do you have to pay taxes when you sell a company car? Learn more about automotive taxes for businesses with this quick review created by The Car Depot.
What Are the Tax Issues When You Sell a Company Car?
Does your business use trucks on the jobsite? Do you use a cargo van for your business? Many businesses in the Birmingham area employ cars, trucks, vans or SUVs as an essential part of the business and when it is time to sell, businesses and business owners may have questions about the tax implications.
When you choose to sell a business vehicle or equipment related to your business, the first thing to know is that any capital gains taxes that result from the sale are applied to the business’s and not your own personal taxes. Before you sell a business vehicle, it is important to consider depreciation – i.e. is the vehicle worth more than the taxes you owe on it? Capital gains are recorded on your tax return and are taxed at a higher rate.
Businesses that choose to sell a company vehicle must take into account the depreciation and value of the used car, truck or SUV. When a vehicle can be recorded as a financial loss and you as the business owner do not make money on its sale, it is best to sell the vehicle. If the sale of the vehicle would result in a capital gain, you would owe additional taxes and it would be smarter to keep the vehicle longer.
What Are Section 179 Tax Deductions?
Section 179 of the tax code allows businesses to reduce expenses and deduct the cost of select pieces of business equipment – which includes company cars and business vehicles – from their taxes. To be considered a business vehicle and expense under Section 179 – a vehicle must be used more than 50% of the time and businesses cannot deduct more than $1 million each year. The monetary value is based on the type of business property as well. For example – the maximum value of an SUV used for a business is $25,500.
Do you have to pay taxes when you sell a company car? Taxes are an important part of any business and if your business requires vehicles – you may want to know what happens when you choose to sell a business vehicle. The Car Depot can help answer your questions. Contact The Car Depot today to learn more about how to get the best price for your used car!