Trading in 2023 XLT for 2026 Raptor.. questions

[DukeCanBuildit]

Of that $5500.00 100% will be taxed. Here we lose 20% to the feds and 9% to the state. That leaves $3905.00 . Not much difference at 3%. I hate paying the government retirement and freebie programs and also pay cash for everything.

Wait. What? You pay federal and state tax on the residual from the sale of a private vehicle, as if it was income?

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[Dr. Zaius]

I just remembered one more thing that might make borrowing the money a better choice.

New American vehicles purchased after 12/31/2024 can deduct the loan interest on your taxes.

For tax years 2025–2028, you may deduct up to $10,000 in interest on loans for new, American-made vehicles purchased for personal use under the One, Big, Beautiful Bill. This deduction is available to both itemizers and those taking the standard deduction. Business-use car loan interest remains deductible based on the percentage of business use.

This would be a big incentive for me if I would've thought of it

I have no debt so the only real deduction I have at the end of the year is charitable giving.

 

[Fordup]

Wait. What? You pay federal and state tax on the residual from the sale of a private vehicle, as if it was income?

No, on the amount of interest accrued each year is taxed. Plus with inflation that money has 4% less buying power every year at current inflation levels.
Actually if you sell a vehicle (or anything else except the home you live in ) for more then you paid for it, it's supposed to be reported as income. Banks turn over every bank transaction over $600 to the IRS under your SS number after the last administration change.

 

[Dr. Zaius]

No, on the amount of interest accrued each year is taxed. Plus with inflation that money has 4% less buying power every year at current inflation levels.
Actually if you sell a vehicle (or anything else except the home you live in ) for more then you paid for it, it's supposed to be reported as income. Banks turn over every bank transaction over $600 to the IRS under your SS number after the last administration change.

When playing by the rules gets you so screwed over, it's no wonder fraud is rampant.

 

[AzScorpion]

No, on the amount of interest accrued each year is taxed. Plus with inflation that money has 4% less buying power every year at current inflation levels.
Actually if you sell a vehicle (or anything else except the home you live in ) for more then you paid for it, it's supposed to be reported as income. Banks turn over every bank transaction over $600 to the IRS under your SS number after the last administration change.

The home does have limits of $250K single and $500K married. Any gain over that you have to pay taxes on. These really should've been doubled by now($550k/$1M) because they were never inflation adjusted!

 

[IdahoRanger]

The home does have limits of $250K single and $500K married. Any gain over that you have to pay taxes on. These really should've been doubled by now($550k/$1M) because they were never inflation adjusted!

At least you still get a step up in basis at death of joint owner or trustee of a revocable trust in our state.

 

[DukeCanBuildit]

The home does have limits of $250K single and $500K married. Any gain over that you have to pay taxes on. These really should've been doubled by now($550k/$1M) because they were never inflation adjusted!

Capital gains tax on your principle residence?

 

[AzScorpion]

Capital gains tax on your principle residence?

Yup, and you have to live there as a full time resident for at least 3 out of 5 years. When I sold the Arkansas house I had to sell it as an investment because we never lived there. Luckily I didn't have a huge gain and had some losses (you can only deduct $3K in losses per year) from years ago that offset the gain so I didn't owe any taxes.

 

[Mighty Little Blue]

The home does have limits of $250K single and $500K married. Any gain over that you have to pay taxes on. These really should've been doubled by now($550k/$1M) because they were never inflation adjusted!

Plus you subtract original purchase price and any improvements you did. When I sold in So Cal I was able to zero out any capital gains tax. Using the improvements we did (all DIY) so I might have stated things costing on the high side, but I do quality work. Sleep good at night I have paid more then my share of taxes over the working years. Also the supposedly BBB said no tax on SS all it was is an extra $6000 deduction if you are over 65 so we still paid some tax.

 

[DukeCanBuildit]

Yup, and you have to live there as a full time resident for at least 3 out of 5 years. When I sold the Arkansas house I had to sell it as an investment because we never lived there. Luckily I didn't have a huge gain and had some losses (you can only deduct $3K in losses per year) from years ago that offset the gain so I didn't owe any taxes.

We have no capital gains tax on the sale of a principal residence. Only one sale per tax year can be deemed as the sale of principal residence.

So, if I wanted to sell both my house and my cottage and not pay any gains on the vacation property, I sell the house and declare it as a principle residence sale. Then, sell the cottage in the next tax year as my principal residence.

Governments keep suggesting they want to change it but no one has the political courage to make that mistake. Same with inheritance taxes - don’t have those either.

 

[DukeCanBuildit]

Plus you subtract original purchase price and any improvements you did. When I sold in So Cal I was able to zero out any capital gains tax. Using the improvements we did (all DIY) so I might have stated things costing on the high side, but I do quality work. Sleep good at night I have paid more then my share of taxes over the working years. Also the supposedly BBB said no tax on SS all it was is an extra $6000 deduction if you are over 65 so we still paid some tax.

I sold an income property and the real estate commission also counted against the capital gain. Woohoo!

 

[AzScorpion]

Plus you subtract original purchase price and any improvements you did. When I sold in So Cal I was able to zero out any capital gains tax. Using the improvements we did (all DIY) so I might have stated things costing on the high side, but I do quality work. Sleep good at night I have paid more then my share of taxes over the working years. Also the supposedly BBB said no tax on SS all it was is an extra $6000 deduction if you are over 65 so we still paid some tax.

That too! I did that too with both my house in MA and added a few "extras" to the AR house.

I've paid enough in taxes being self employed for 36 years I'm getting everything back that I can now!

 

[AzScorpion]

We have no capital gains tax on the sale of a principal residence. Only one sale per tax year can be deemed as the sale of principal residence.

So, if I wanted to sell both my house and my cottage and not pay any gains on the vacation property, I sell the house and declare it as a principle residence sale. Then, sell the cottage in the next tax year as my principal residence.

Governments keep suggesting they want to change it but no one has the political courage to make that mistake. Same with inheritance taxes - don’t have those either.

Not here they tax you on anything they can. A second home and investment property is all taxable (minus deductions) and if you want to bypass that you have to move into it and live there 3 out of 5 years to qualify as a permanent residence. So basically every time you buy a house the clock starts over again.

Oh, and they tax ALL of your lottery winnings unlike up there where you get to keep it!

 

[DukeCanBuildit]

Not here they tax you on anything they can. A second home and investment property is all taxable (minus deductions) and if you want to bypass that you have to move into it and live there 3 out of 5 years to qualify as a permanent residence. So basically every time you buy a house the clock starts over again.

Oh, and they tax ALL of your lottery winnings unlike up there where you get to keep it!

And y’all think our gov’t is communist!

 

[Dr. Zaius]

Oh, and they tax ALL of your lottery winnings unlike up there where you get to keep it!

Don't tell anybody, but years ago I bought a lottery ticket and won.

I didn't report it and kept every bit of that $10 to myself

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