Hello, not sure if this has been answered before. Sold my 18 Honda Accord to carmax. lease payoff was almost 16,000 their offer was around 24,000 so they cut me a check for almost 8,000. do i have to pay taxes on the money I received from carmax?
So many times
Not as income, but on the sale (everywhere except beautiful California with their 10-day resale exemption) - yes.
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Thanks so much for the response. Now this maybe a dumb question but do I pay the sale tax when I file my taxes? Or how would I go about paying that? I’m clueless sorry.
If carmax purchased the vehicle from Honda Finacial, no sales tax is due. If you bought the car from Honda financial and resold it to carmax, sales tax would have been paid when you transferred the title into your name (or as part of the buy out, depending on state)
Also interested in this. For a car owned outright or financed it seems easy to figure out the capital gain/loss but how would you figure it out for a lease? Would it be selling price of vehicle at time of lease?
Thanks for the reply. I guess that’s what has me so confused. Carmax bought the lease from Honda financial they contacted them and got the payoff amount.
Then you should have no taxes due.
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Thanks so much!!
I’m wondering that too.
Now that I’m thinking about it, I would guess it’s close to impossible to owe capital gains on the sale of a lease of a normal car. At least with my last Jeep the $12k in incentives show as amount due at signing on the contract so I def. paid taxes on those. So I would guess gross cap cost would be the cost.
Probably varies by state, so I’ll speak to Texas law, which is the one I’ve actually read recently. In Texas, when executing a lease buyout clause in a lease, the initial purchase price at the start of the lease is used as your basis.
Normally, yes, although there have been some people (4xE) that have sold for a net gain.
Im in nj idk if it’s the same as Texas . But for example if it is like Texas law. I lease the car with a sticker price of 26,000 sold the lease to carmax for 24,000 then that means I still sold it on a loss and would not need to pay capital gains on it correct?
While one should always verify these with a cpa knowledgeable of their local tax law, yes, that is my understanding.
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Ok thanks for your help. I really appreciate it.
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But if you were seriously trying to figure out what your true cost basis is on a lease for capital gains tax purposes, then the original sticker price would be irrelevant.
What would be included is the total of any lease payments, DAS, maintenance, tires, insurance, etc. etc. You could probably even include gas.
Which is why for 99.9% of people who have sold a leased car and pocketed any equity there’s no tax due, for that $8k in positive equity that CarMax cut you a check for is not “profit” but rather just a “rebate” back on your total cost of leasing.
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Ok so If I understand it I should not have to pay any capital gains taxes then. Payments I made on the lease were a little over 10k plus and 2,000 I had put down. So even though I got 8,000 check from carmax I still took a loss. correct? Thanks for your response.
Correct.
And even if in an alternate universe someone did the math and actually made a genuine profit in one of these scenarios, you’d have to be a complete idiot to list that on your taxes 
As long as they fail to send out a 1099
If the sum total of your payments was <$8k, you should probably owe taxes on some of that $8k.
If we are being insufferably pedantic, you never actually owned the car you “sold”. Honda Financial owned it, and you purchased an agreement which allowed for use of the car over a defined timespan, as well as an option to purchase. You then, effectively, sold that option to Carmax, who exercised it and paid you for it. That contract had a value of $8000 at the time of sale. Depending on what the tax basis of that contract is, you might owe taxes on that.
If we’re really being pedantic, if you owned that contract (lease) for more than 12 months, and sold for more than its basis, the income should be treated as capital gains. 
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