Hello
I just sold my Range Rover Sport lease and got $15k in profit after the buy out. Do I owe any income tax on this?
I am in Houston Tx.
Thank you!
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This is a question for a CPA. There are many here who may offer opinions, but the conclusive answer cant occur here.
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Did you sell to an LR dealer? They are super hungry for good inventory right now.
I donāt see how it is profit unless the $15k was more than the lease payments previously made?
Edit: I initially read this as end of lease buyout, but it could have been much sooner now that I am thinking straight. Selling a vehicle for a profit is considered a capital gain by the IRS. But itās not so simple as difference between purchase price and selling price. For example, generally sales tax and fees from the initial purchase are considered part of your cost basis.
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I canāt imagine anything more pennywise and pound foolish than taking tax (or legal) advice from some online strangersā¦if theyāre wrong, whatās your recourse?
But if you feel like rolling the diceā¦
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Does that mean when you get fleeced on your trade by the dealer (under normal circumstances) that one can write-off the loss? Its gotta work both ways, right?
Obligatory, not a CPA. That being said:
"The category of āpersonalā capital assets is an all-encompassing category and includes almost everything you own. It includes items like your car to your television to your clothing to your vintage eight-track player.
When you sell an item, the selling price minus your basis in the item (usually the amount you paid for the item) will equal your gain or loss. Anytime you sell one of these items and the sale results in a gain, you will be taxed on this item.
However, the IRS prohibits taxpayers from claiming any personal losses on their tax return. So, if you sold your car and incurred a $3,000 loss, unfortunately, you wonāt be able to claim that loss on your taxes."
So basically, the IRS screws you.
But what if you sell a few old things at a loss the same year, does it offset the gain?
And if it is an isolated event, will the IRS know or even care?
I am NOT saying commit fraud, I am just saying if you made $10k selling a car, Iām sure you had other things you disposed of that year which would offset a significant portion of some or all of that. Throwing out that old mattress you paid $2000 for a few years ago, as one example.
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maybe heās just flexingā¦
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Hopefully youāre not getting another RRS lease any time soon.
No, I sold it to a used car dealership. I had several offers around town. It was a 2019 with 10,500 miles in excellent condition.
No. I sold it because besides the current market opportunity, I didnāt really like how it drove. So I am leasing a cayenne. Got a horrible deal but Iām still ahead due to this profit.
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I actually still had another year on the lease. But this equity almost paid entirely what I paid for the time I had it
NOT a CPA, but in that case, it sounds like itās more of a wash over the course of the lease. Iād say consider this is a rare opportunity to have driven a RR for āfreeā for a few years rather than treat it as a āprofitā. Again, NOT a CPA. 
So you didnāt profit at all, you just recouped some of your expenses.
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This is the most millenial statement ever!!
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Some people are clearly not good at math, let alone accrual accounting and amortizationā¦
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Well, thereās definitely a big misunderstanding for many between profit and equity. They often get used interchangeably, even though theyāre very different things and they certainly have very different tax implications.
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Not much different from startup accounting - itās all about the story - life is short enjoy it
I am all for YOLO and living la vida loca but I beg to differ. If you donāt understand the difference between profit and equity (as mllcb42 expalined), your life is going to be less enjoyable, since you will either be making bad decisions or getting hoodwinked by dealers. Case in point is here.
15 k āprofitā rolled into horrible Cayenne lease. Can you say someone just probably messed up their retirement. A 15k āwindfallā invested today will be worth 100k by retirement [20-30 yr timeframe]ā¦ And all that for a shitty deal on a stripper Cayenne which was an impulse purchase just because someone had convinced themselves of a 15k āprofitāā¦
Can we be clear here - the only 2 parties that made a āProfitā here are the Porsche dealer and the RR dealer?
End of rantā¦
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The silver lining is that he did not lease another RR. He just leased another money pit but at least a driveable oneā¦
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