What tax do you need to pay when selling a car?

Car sales tax - in what cases is it necessary to pay?

Transactions that bring profit to the seller are subject to income tax. Selling a car is no exception. However, since 2019, changes have been made to the Tax Code of the Russian Federation, expanding the list of persons exempt from paying personal income tax when selling their car.

The legislative framework

The main legal act defining the obligation of residents to pay taxes is the Tax Code of the Russian Federation. The sale of a car is subject to personal income tax, which is covered by Chapter 23 of the said code.

Separate articles of Chapter 23 determine the range of taxpayers, objects of taxation, tax base, conditions for payment and tax exemption.

Do I need to pay tax on car sales?

The sale of a car is considered cash income. In accordance with this, such a transaction falls under Article 210 of the Tax Code of the Russian Federation and is subject to personal income tax .

The legislation also establishes a special three-year period of possession of an item, after which the sale transaction is not subject to taxation. Article 217 of the Tax Code of the Russian Federation lists a long list of income that is not subject to personal income tax. Clause 17.1 of the article states that tax is not paid on the sale of property that has been in possession for 3 years or more. For example, a car was bought for 330 thousand rubles and sold for 345 thousand rubles. The seller’s profit was 15 thousand, but since the car was owned for more than 3 years, he does not pay transport tax.

Another relaxation concerns the cost of the vehicle. If the car was sold for a price of less than 250 thousand rubles , then you do not need , even if the seller made income during the sale.

What is the tax for individuals

The personal income tax is 13% . It should be borne in mind that not the entire sale amount is subject to taxation, but only the profit received. For example, if it was 100 thousand rubles, then the tax amount is calculated from this amount and is 13 thousand. For non-residents of the Russian Federation, the tax amount is higher - 30% of income.

The declaration for the previous year must be submitted by April 30 of the following year . Sellers who have owned the car for more than 3 years are exempt from filing a declaration.

You can submit your declaration online or by visiting a branch in person. When submitting you must provide:

Declaration 3-NDFL (filled out with a special program);
passport;
TIN certificate;
a copy of the title of the sold car;
contract of sale;
documentary evidence of the presence or absence of income (old policy, other evidence).

Tax free amount

When calculating personal income tax, a tax-free amount is established in the amount of 250 thousand rubles . no tax is charged at all . If it is higher, then income exceeding this amount is subject to taxation.

Tax exemption

The following categories of sellers are completely exempt from paying personal income tax:

have owned the car for more than 3 years;
did not receive a profit from the sale;
those who sold cars for less than 250 thousand rubles;
spending an amount in one tax year on the purchase of a new car that exceeds the sale price of the old one.

How to calculate sales tax

Calculating personal income tax is very simple. The purchase price must be subtracted from the sale price, thereby obtaining the resulting income. Then the resulting amount must be multiplied by 0.13% (13 percent tax rate) or by 0.3 if the seller is not a resident of the Russian Federation.

Example
A vehicle was purchased for 250 thousand rubles, sold for 300 thousand rubles, the ownership period was 2 years 6 months. The income received is 50 thousand rubles, multiplying by 0.13, we get the amount required for payment of 6,500 rubles.

Tax on the sale of a donated car

The donation and subsequent sale of the gift is also considered generation .

Important
The taxation of donated cars has several important nuances that can be considered using an example.

A gift under civil law is always gratuitous, so it does not have a specified price . However, the donor spent money when purchasing it, that is, the formal value of the gift appears in the documents.

The gift agreement itself is also subject to taxation, since the donee derives income in the form of a gift. For example, a relative gave the seller a car worth 1 million rubles. The following year, the donee paid a fee in the amount of 130 thousand rubles. (13%) of the amount of the gift value. It is this amount that will be used to determine the seller’s expenses associated with the purchase of the vehicle.

If the recipient has owned the gift for more than 3 years, then when selling the car he will be exempt from paying personal income tax. However, if he sells the car before the above deadline, he will have to pay a fee to the state. When calculating the amount of the fee from the sale price (for example, 500 thousand rubles), you need to subtract the acquisition costs (130 thousand rubles) and multiply the result by 0.13. With this scheme, the amount that will have to be paid will be 48,100 rubles.

How to avoid paying tax on car sales?

There are several tricks that allow you to be completely exempt from paying personal income tax.

Owning a car for more than 3 years - such persons are not required to pay the fee.

Sell a car for less than the purchase price . Since a car is a depreciating item, its value usually decreases over time. Therefore, the overwhelming number of sellers are exempt from paying because they do not make a profit.

a large amount in one tax year . In this case, a tax deduction will be applied. If the amount of purchase costs exceeds the cost of selling the old car, then you will not have to pay personal income tax.

Indicate in the contract a cost of less than 250 thousand rubles.
An illegal but effective method of tax evasion, very often used in Russia. The contract simply indicates a price less than the non-taxable maximum of 250 thousand rubles. However, you need to know that using this method can lead not only to problems with the tax authorities. If is terminated or declared illegal or void, returned . In this case, you can lose an amount significantly exceeding the hypothetical fee.

Conclusion

The strictness of domestic tax legislation in the field of personal income tax is compensated by broad benefits that allow you not to pay tax. There are several legal reasons and one illegal way for a seller to exempt himself from paying fees after selling a car.

Useful video

Here they tell you when you need to file a tax return when selling a car:

Car sales tax

How to calculate and reduce

A car is property. When the owner sells it, he receives income. You have to pay tax on income in Russia, and selling a car is no exception. But car sellers will not always have to give part of their income to the state: sometimes they can avoid paying tax at all, greatly reduce it, or not report the transaction to the state at all and not submit a declaration.

Here's what you need to know if you're selling a car.

What tax is imposed on the sale of a car?

The sale of a car by an ordinary person is subject to personal income tax - personal income tax. Residents of the Russian Federation pay it at a rate of 13%. This is the same tax that is withheld from official salaries or that must be charged when renting an apartment or selling an apartment before the minimum tenure period.

If a car is sold by a company or individual entrepreneur, they pay tax taking into account their taxation system - for example, VAT, income tax or tax on the difference between income and expenses.

When is the sale of a car tax free?

There are cases when the car is sold, money is received for it, but there is no need to pay tax. It depends on the period of ownership, the cost of the car and the type of transaction.

Duration of possession. When an individual sells any property, the minimum period of ownership is taken into account. This is a period after which the owner is not required to file a declaration and pay personal income tax. For cars it is three years.

If the car was bought in 2014 and sold in 2018, there will be no sales tax at all. You also won’t have to report your income to the state. The tenure period must be counted from the date of conclusion of the purchase and sale agreement.

minimum period of ownership of a car for sale without tax

Cost of the car. If you sell a car before the minimum ownership period, you will have to charge personal income tax and file a declaration. But the tax can be reduced using either of two types of deductions. They are available only to residents.

Deductions to reduce personal income tax when selling a car

Type of transaction. If a car is sold under a purchase and sale agreement, the owner receives money for it, this is income. But if the car is transferred under a gift agreement, there is no income. Because the deed of gift is a gratuitous transaction. The owner of the car does not have to file a declaration and pay tax. But the one who receives the gift may have such an obligation: personal income tax must be paid on the cost of the car if it was received as a gift not from a family member or close relative.

Car sales tax calculation

Tax on car sales should be calculated using the formula:

(Income from sale - Deduction) × 13%

Sales revenue is the amount the seller receives. It is specified in the purchase and sale agreement. You can choose the type of deduction at your discretion and use the one that is more profitable.

For example, Ivan bought a used Peugeot 408 in 2016 for RUR 750,000. In 2018, he sold this car for RUB 750,000. The minimum period of ownership has not yet passed, so Ivan needs to file a declaration and calculate personal income tax. His income was 750,000 RUR, but he does not need to pay tax, because there is a deduction - confirmed expenses for the purchase of a car, the same 750 thousand. The tax base should be calculated as follows:

750,000 R − 750,000 R = 0 R

The tax base is zero, and so is the tax. There will be no personal income tax payable in the declaration.

If Ivan had not bought this car, but had inherited it from his father, he would not have been able to confirm the costs of the purchase. But the tax could be reduced with the help of a deduction, which is due even without purchase documents. Then he would calculate personal income tax as follows:

(750,000 R − 250,000 R) × 13% = 65,000 R

Even if you have documents confirming expenses, you can choose a deduction in the amount of RUB 250,000. For example, if you buy a wrecked car for RUB 150,000, and then repair it and sell it for RUB 250,000, it is more profitable to apply a deduction in the amount of RUB 250,000 rather than actual expenses.

Procedure for paying tax on car sales

When selling a car, personal income tax must be calculated and paid independently. Unlike transport tax, this amount is not calculated by the inspectorate and will not be included in the tax notice.

After the seller submits the declaration, he must monitor the deadlines himself, fill out payment documents and pay the tax on time.

Deadlines for paying tax on car sales

Car sales tax must be paid by July 15 of the following year. And only if something has been accrued. When selling after the minimum ownership period, there is no declaration or tax - the seller does not owe anything to the state.

If the tax base according to the declaration is zero, you will not have to pay either.

But if even after applying the deduction there remains an amount to be paid, it must be transferred to the budget before July 15 of the next year. For example, a car was bought in 2018 and sold in 2019. This means that the tax must be paid before July 15, 2020.

You can pay tax through the taxpayer’s personal account, using the details from your card, or using the special “Pay Taxes” service.

A tax payment receipt can be generated on the website nalog.ru. You can pay not only for yourself, but even for third parties from your card

Tax return

If the car was sold before the minimum ownership period, you need to file a tax return. This obligation does not depend on the accrued tax. Even if the deduction has reduced income to zero, the declaration in form 3-NDFL will still have to be filled out and submitted.

Documents for filing a declaration. Proof of income and expenses must be attached to the declaration if they are claimed as a tax deduction. Income can be confirmed by a purchase and sale agreement, and expenses - by an agreement and a receipt from the previous seller or by a check if the car was sold to a car dealership on a trade-in basis.

How to fill out a declaration. You can use any convenient option:

By hand or on a computer. Download the form for the corresponding year on nalog.ru.
In the "Declaration" program. It can be downloaded from the tax office website and installed on your computer. The completed declaration is printed from the program. Or you can send the file through your personal account.
Through your personal account. To do this, you do not need to download forms and programs. In your personal account, you just need to enter the data following the prompts. The declaration is generated in a few minutes - then it can be signed and sent to the tax office.

If the car is sold to an individual, you need to select the appropriate source of income and fill in the buyer’s data. The income code for the sale of the car is 1520. When choosing a deduction, two options are offered with prompts and codes 903 and 906. In the same section, the tax payable will be automatically calculated. This is what the declaration section looks like with tax calculation. The amount of income, deductions and accrued personal income tax is indicated here.

How to submit a tax return. The declaration can be submitted in one of three ways:

Personally. Print the completed declaration or enter the data in the blank form by hand. The declaration on paper can be submitted to the tax office in two copies. Take one with an acceptance stamp for yourself - it will confirm that the obligation has been fulfilled.
By mail. The completed declaration on paper can be sent to the tax office by mail. There is no need to have your signature certified by a notary. When the tax office receives it does not matter, the main thing is the date of sending.
Through your personal account. Declaration forms for filling out are located in the section “Life situations” → “Submit a 3-NDFL declaration”. If you fill out the declaration online, the file will be generated automatically. If the declaration was filled out in the program, you need to attach the finished file and send it to the inspectorate.

In your personal account you can choose the method of sending the declaration

The most convenient way to submit your declaration is online. If you fill it out on paper, you may make a mistake. In your personal account and the Tax Return program, the file is checked before sending: all errors are marked, there are tips for correction. If there are any inaccuracies, they can be easily corrected—you don’t have to fill out all the sheets again. But any method will be legal. The main thing is for the tax office to find out about your income on time.

Tax return filing deadline. A declaration of income when selling a car must be submitted by April 30 of the following year. If the last day falls on a weekend, it is transferred to the next working day. If the car was sold in 2019, the declaration must be submitted by April 30, 2020.

What happens if you don't file a declaration? When selling a car before three years of ownership, a declaration must be filed, even if there is no tax due. If this is not done before April 30 of the next year, the tax office will issue a fine - 5% of the accrued tax for each month of delay, but not more than 30%. If there is no tax, the minimum fine will still be 1000 rubles.

It will not be possible to hide the sale of a car from the tax authorities: it will receive all the data from the traffic police when the new owner registers the car in his name. Or when the seller stops registration so as not to pay transport tax and fines.

Tax on car sales for individual entrepreneurs

If an entrepreneur sells a car, what matters for tax calculation is whether he used the car in business or not. If the car was used for business activities, tax will have to be paid taking into account the specifics of the taxation system that the individual entrepreneur applies. And if this is a personal car of an individual, even with the status of an individual entrepreneur, he pays personal income tax at the usual rate of 13%. This income must be reported according to the 3-NDFL declaration.

Individual entrepreneur on the simplified tax system “Income”. For example, an entrepreneur bought a car for cargo transportation for 1.5 million rubles - this is his business. He pays 6% of total income. Two years later, the individual entrepreneur sells this car for 1.2 million rubles. The entrepreneur will have to include the entire amount of income from the sale of the car in the declaration on the simplified tax system and pay 6% excluding expenses, although he did not make money from the sale. Such an individual entrepreneur is also not entitled to a deduction: they are not provided to entrepreneurs in special regimes. The entrepreneur will pay 72,000 RUR.

The individual entrepreneur tax on the simplified tax system “Income” when selling a car should be calculated using the following formula:

All sales income × 6%

Individual entrepreneur on the simplified tax system “Income minus expenses”. If an entrepreneur takes expenses into account when calculating his basic income, then when selling a car he will be able to deduct the costs of purchasing it from the amount received for the car. But only that part that was not previously taken into account when calculating the tax on the simplified tax system. If previously the purchase of a car has already affected the reduction of the basic tax, it will not be possible to take into account the costs again when selling it.

For example, an individual entrepreneur using the simplified tax system “Income minus expenses” bought a car for cargo transportation for 1.5 million rubles. During his work, he already wrote off part of the purchase costs - only 500,000 RUR. And then the entrepreneur sold this car for 1.2 million rubles. The tax will be calculated using the following formula:

(Income from the sale of a car − (Purchase expenses − Previously written off expenses)) × 15%

The tax on the sale of a car in the example situation will be 30,000 RUR.

IP on OSN. If an entrepreneur sells a car under the general taxation system, he will be able to use regular tax deductions because he pays personal income tax at a rate of 13%. Income can be reduced by expenses by excluding the previously taken into account portion. And if there are no confirmed expenses, a deduction in the amount of RUR 250,000 applies. The general system can be used if the individual entrepreneur works on UTII or a patent, but the sale of the car does not fall under these special regimes, and the individual entrepreneur did not submit an application for simplification. This is exactly the case when using the simplified tax system “Income” is unprofitable, because there are no deductions and expenses cannot be taken into account.

IP on NPD. If an individual entrepreneur applies the preferential special regime “Tax on Professional Income”, the sale of a car will definitely not fall under its scope. Since it is impossible to combine NPA and simplified taxation, the sale of property is subject to tax on the general system. That is, the individual entrepreneur will charge tax at a rate of 13%. And although there is no reporting on the NAP, the cost of the car will have to be declared in the usual way. But the minimum tenure and deductions will apply.

Since 2019, all individual entrepreneurs on OSN and NPD have been allowed not to pay personal income tax when selling a car after the minimum ownership period. There was no such exemption before.

Tax on car sales for non-residents of the Russian Federation

A resident of the Russian Federation is a person who has stayed in Russia for at least 183 days over the next 12 consecutive months. If a resident sells a car, the personal income tax rate for him is 13%. There is also the right to deductions and a minimum holding period.

Non-residents have different tax calculation rules. Moreover, even a Russian citizen can be a non-resident. The main thing here is not citizenship, but the number of days spent per year in the country.

On what amount is tax not paid on the sale of a car?

A car sale transaction is not uncommon. Almost every driver sold a vehicle. Selling a car can be called a fairly simple operation. However, it is worth considering that in order to prevent fraud, it must be carried out in full compliance with the current laws of the Russian Federation. After selling the car, the former owner is obliged to provide the relevant documents to the Federal Tax Service for a report.

On what amount is tax not paid in any case?

The driver may be exempt from the need to contribute funds to the state budget if, according to the agreement between the parties to the transaction, the cost of the vehicle is less than 250 thousand rubles. This amount is not taxable. The original cost of the car is not taken into account in such cases.

However, tax exemption does not eliminate the need to contact the Federal Tax Service. The acquired monetary benefit must be recorded by the state without fail in any agreement for the sale and purchase of a car that has been in use for more than 3 years. If the driver evades the obligation to record income, the driver will face penalties.

In what cases is tax paid when selling a car?

Before selling a car, the driver must take into account the circumstances that may affect the need to pay tax.

To avoid unnecessary expenses, you need to consider the following circumstances:

The tax is imposed on the sale and purchase of a car that has been in use for more than 36 months. The period of use begins from the date specified in the contract for the purchase of the car by the owner. So, if the driver delays the sale and waits until the period of operation becomes equal to 3 years and one day, he will avoid having to pay tax.
The motorist will be required to pay tax if he has gained profit from the sale of the car. That is, he sold the car at a price higher than the cost of purchasing the vehicle.

It is worth calculating the amount of tax to judge the rationality of the car purchase and sale transaction. Sometimes it is better to wait to sell your car in order to save money. If the driver’s situation corresponds to one of the two listed points, he will provide the state with part of the income as a tax contribution.

How much will you have to pay

The sale of a vehicle in the indicated cases is subject to income tax. Thus, residents of the country are required to contribute 13% of their income. This rate is provided for citizens of the Russian Federation and foreign citizens living in the country. A resident will be an individual residing in Russia for more than 183 days. Non-residents are required to pay 30% tax on the profits received.

It is important to note that income tax is imposed on all car purchase and sale transactions, regardless of the number of vehicles sold. The number of agreements concluded during the year is not taken into account when calculating the tax.

When will income from the sale of a car not be taxed?

Legislatively, there are several situations that officially exempt a motorist from paying a tax contribution. A driver who wants to sell a vehicle should familiarize themselves with this information in advance in order to minimize their costs.

So, income from the sale of a car will not be taxed under the following circumstances:

The motorist has documented ownership of the vehicle for more than 3 years. This period is the period between the dates of purchase of the vehicle and its sale by the owner.
The driver did not receive any income from the sale of the car . This means that the car's selling price will be less than or equal to the original price. To prove the fact that no profit was acquired, the former owner is obliged to provide the tax authority with documents confirming the non-profit nature of the transaction (sale and purchase agreement, payment receipts, acts of acceptance and transfer of vehicles).
The motorist sold the car at a price equal to the tax-free amount. The driver is exempt from paying tax if he received a benefit of up to 250 thousand rubles.

If at least one of the listed conditions is present, the driver is legally relieved of the obligation to pay tax to the state.

Calculation of tax on car sales

You can find out the tax rate yourself. To do this, you need to determine the tax base, which is the selling price of the car. Based on this amount, the state will determine the amount of the tax contribution.

The general formula for calculation includes one action - multiplying the cost of the car specified in the purchase and sale agreement by the interest rate. It is important to take into account the difference in the contributed percentage of income for residents (13%) and non-residents (30%).

You can consider the calculation procedure using a specific example.

So, if a resident motorist sold a vehicle at a price of 600 thousand rubles, he should make the following calculation: 600,000 x 0.13 = 78,000. The result of the calculation is the amount of the tax contribution.

When selling a car worth 600 thousand rubles to a foreign citizen living in the Russian Federation for less than 183 days, the calculation will look like this: 600,000 x 0.3 = 180,000. The non-resident is forced to pay about a third of the amount received as a result of the sale.

Recommendations on how to reduce the tax amount when selling a vehicle

Every motorist can minimize expenses after selling a car. For these purposes, you should follow the following recommendations:

If the seller is an individual, take care of drawing up a receipt. The paper must indicate the full, reliable data of the seller, the amount of funds received, the number of the purchase and sale agreement and the date of its preparation.
Save all documents related to the vehicle sale transaction. This type of paper may be required as evidence of the essential circumstances of the agreement that exempt the driver from paying taxes.
If the life of the car is approaching three years, the motorist should wait a while. A short wait will avoid the obligation to pay tax contributions.

All vehicle sales transactions are subject to registration in the traffic police. The information is then transmitted to the tax authorities. For this reason, motorists should not count on concealing the fact of making a profit from the sale of a vehicle.

On what amount is tax not paid on the sale of a car?

On what amount is tax not paid in any case?

In what cases is tax paid when selling a car?

Before selling a car, the driver must take into account the circumstances that may affect the need to pay tax.

To avoid unnecessary expenses, you need to consider the following circumstances:

The tax is imposed on the sale and purchase of a car that has been in use for more than 36 months. The period of use begins from the date specified in the contract for the purchase of the car by the owner. So, if the driver delays the sale and waits until the period of operation becomes equal to 3 years and one day, he will avoid having to pay tax.
The motorist will be required to pay tax if he has gained profit from the sale of the car. That is, he sold the car at a price higher than the cost of purchasing the vehicle.

How much will you have to pay

When will income from the sale of a car not be taxed?

So, income from the sale of a car will not be taxed under the following circumstances:

The motorist has documented ownership of the vehicle for more than 3 years. This period is the period between the dates of purchase of the vehicle and its sale by the owner.
The driver did not receive any income from the sale of the car . This means that the car's selling price will be less than or equal to the original price. To prove the fact that no profit was acquired, the former owner is obliged to provide the tax authority with documents confirming the non-profit nature of the transaction (sale and purchase agreement, payment receipts, acts of acceptance and transfer of vehicles).
The motorist sold the car at a price equal to the tax-free amount. The driver is exempt from paying tax if he received a benefit of up to 250 thousand rubles.

If at least one of the listed conditions is present, the driver is legally relieved of the obligation to pay tax to the state.

Calculation of tax on car sales

You can consider the calculation procedure using a specific example.

Recommendations on how to reduce the tax amount when selling a vehicle

Every motorist can minimize expenses after selling a car. For these purposes, you should follow the following recommendations:

If the seller is an individual, take care of drawing up a receipt. The paper must indicate the full, reliable data of the seller, the amount of funds received, the number of the purchase and sale agreement and the date of its preparation.
Save all documents related to the vehicle sale transaction. This type of paper may be required as evidence of the essential circumstances of the agreement that exempt the driver from paying taxes.
If the life of the car is approaching three years, the motorist should wait a while. A short wait will avoid the obligation to pay tax contributions.

Tax on the sale of a car owned for more or less than 3 years

Any person who receives income from the sale of property is required to pay income tax. The car is a registered property, that is, the tax office knows for sure (or will soon find out) about the fact of the sale of the iron horse. In this article we will look at how in 2019 it is legal not to pay personal income tax or to do it at a minimum. We’ll also find out in which case you can “get into trouble” and owe large sums to the budget.

There are six options for resolving the issue of paying tax on car sales in 2018:

Option 1 - the car has been owned for less than 3 years;
Option 2 - the sale amount is less than 250 thousand rubles;
Option 3 - the deal has become unprofitable for you;
Option 4 - it would seem that the deal is “plus”, but we will not pay;
Option 5 – “we’re out of money” or we’ve lost the purchase agreement;
Option 6 - we simply pay regular tax on the profit from the sale.

By the way! Income tax for individuals is regulated by Chapter 23 of the Tax Code of the Russian Federation.

Option No. 1 - the car has been owned for less than 3 years

Let's consider the first option - you have owned the car for more than three years. In this case, you do not owe the country anything - neither pay nor visit government agencies.

It doesn’t matter whether you bought a car for 100,000 rubles, but sold it for 900,000, a million, etc.

Reports for three years from the moment of state registration of the car. Therefore, before selling, check the date on the title.

Option No. 2 - sale price below 250,000 rubles

In this option, you will have to go to the tax office (or do it on the State Services website), draw up a declaration in form 3-NDFL, but you will not need to pay any money to the state.

The state has established a non-taxable transaction amount - 250,000 rubles. If your car was sold for an amount less than or equal to 250,000 rubles, you simply fill out the 3-NDFL declaration and don’t worry about anything.

Detailed instructions for filling out and samples of all declarations can be obtained from the tax office at your place of residence or filled out and submitted on the State Services website.

Option No. 3 - the deal is unprofitable

If you still have documents about the purchase of your car and the purchase price is higher than the sale price.

For example : you purchased a car for 600,000 rubles, and sold it for 550,000. You lost 50,000 rubles.

In this case, you must attach the first purchase and sale agreement and the second sales agreement to the declaration. If you are at a loss, then no tax will be taken from you.

In fact, this is almost always the case - we sell the car for less than we bought it for. However, not everyone knows that this procedure needs to be “showed” to the tax service.

Option #4 - it seems like you have to pay, but no!

Let's consider an example: you purchased a car for 300,000 and invested another 100,000 rubles in it. You have saved all the receipts from the service and spare parts stores, that is, you can document the amount of expenses.

Ownership costs amounted to 400,000 rubles, and you sold the car 2 years later for 375,000. The tax authorities may think that you received an income of 75,000 rubles, but in fact our loss was 25,000 rubles.

If for the owner in this case a significant amount of 9,750 rubles (13% of the profit of 75,000), then he just needs to visit his “native Federal Tax Service”, fill out 3-NDFL and attach documents on payment for work and materials for this car.

Be sure to keep all receipts, work orders, receipts, acts related to the repair and improvement of your car. Perhaps this will significantly reduce tax payments in the future.

Option No. 5 - “we’re out of money” or we’ve lost the purchase agreement

The cases discussed above imply that you have in your hands a purchase agreement for your iron friend. But if suddenly the contract was lost and there is no way to restore it, you could easily end up with a huge amount of tax.

If you cannot document the purchase amount, then it is considered that the difference between the purchase and sale prices is the full cost of selling the car (with the exception of 250 thousand - this is a tax deduction, more on that below). In this case, it does not matter whether you received actual profit from the sale or not.

For example: you bought a car for 1.1 million rubles, and after a year of ownership you sell it for 1 million rubles.
If you do not have supporting documents, you pay 13% of the entire sale amount: (1 million - 250 thousand tax deduction) * 13% = 97.5 thousand rubles.
At the same time, if you had a purchase document, you would pay only 13 thousand rubles:
(1'100'000 - 1'000'000) * 13% = 13'000 rubles.

But don't get upset ahead of time! It is theoretically possible to resolve the issue of documents - try visiting the registration office where you registered the vehicle, or the law firm that helped draw up the contract.

Option No. 6 - we pay personal income tax, there is nowhere to go

Let's summarize in what cases we will have to pay tax:

Our vehicle is more expensive than 250,000 rubles.
It has been owned for less than 3 years.
You made a profit - the sale amount is more expensive than the amount of the original purchase and the amount of documented investments in the car.

In this video you can also learn in detail about all possible cases of tax payment:

How is tax on car sales calculated?

In the examples above, we looked at several examples of calculation, but just in case, we provide a general formula for calculating personal income tax:

Tax amount = (Sale amount - Purchase costs - Vehicle maintenance costs) * 13%

Example: We sell a car for 3 million rubles.
We bought a car for 1 million rubles and invested 200 thousand rubles in it. We substitute the initial data and get: personal income tax = (3,000,000 - 1,000,000 - 200,000) * 13% = 234,000 rubles

What is a tax deduction and when is it beneficial to use it?

According to paragraphs. 1, clause 2, article 220 of the Tax Code of the Russian Federation, the seller has some benefit - a tax deduction, which can sometimes help out in case of loss of documents for the purchase of a car and when the cost of the vehicle is low.

A tax deduction is the right to deduct 250 thousand rubles from income per calendar year. The amount of 250 thousand can be used in several transactions. For example, split deductions of 125 thousand into two transactions.

Important nuance!
When using a deduction, according to the law, the seller “refuses” to take into account the costs of purchasing and maintaining the vehicle.

Let's look at two examples when using a deduction is beneficial:

The documents for purchasing the car were lost

Kuznetsov A.A. is selling his two-year-old Kia Sportage car for 1 million rubles, but he has lost all the documents for the purchase.
Let's consider the cases of sales with and without deduction: Tax amount with deduction = (1,000,000 - 250,000) *13% = 97,500 rubles
Amount without deduction = 1,000,000 *13% = 130,000 rubles

Inexpensive car

Pavlov A.B.
I bought a Kia Rio car in 2016 for 230 thousand rubles. In 2018, Pavlov decided to sell his car for 270 thousand rubles. Let's consider the cases of sales with and without deduction: Tax amount with deduction = (270,000 - 250,000) *13% = 2,600 rubles
Amount without deduction = (270,000 - 230,000) *13% = 5,200 rubles

As can be seen from the examples given, this benefit is quite viable, but in this case you will have to visit the tax office and apply for a deduction and 3-NDFL declaration (or do it online).

Will you make a deduction? Need 3-NDFL

In many of the examples above, we mentioned the 3-NDFL declaration - this is one of the main reporting documents for individuals. Filling out this document is absolutely not difficult.

There are many programs and videos to help. 3-NDFL can be sent even via the Internet using the State Services website - about this in the video: