Tax on the sale of a car less than 3 years in the property, by proxy

By law, the seller must pay tax on any transaction for the sale of property. Such transactions include the sale of vehicles. When determining the amount of tax, a number of factors are taken into account that the seller should be aware of. This knowledge will help him reduce costs or even avoid them completely.

Income tax for individuals is 13%, i.е. if the car was sold for 500 thousand rubles, according to the law, the seller must pay 65 thousand to the state treasury. The amount is quite impressive, but in full such tax will not have to be paid. Its size will change according to:

1. Benefit received by the seller.
2. The period of ownership of the vehicle until the date of sale.
3. Tax deduction.

Review each item in order, starting with the first. For example, the seller bought a car for 1 million rubles and sold it less than 3 years after the purchase for 800 thousand rubles. The seller did not receive any benefit from such a transaction; he does not have to pay taxes. However, it is important to remember that in order to be exempt from income tax, the seller must attach 2 sales contracts to the tax return:

• Received when buying a vehicle.
• Received when selling a car.

In the absence of the first contract, you will not be able to use this benefit.

The second situation is related to the period the car was owned by the seller. For example, a vehicle was purchased for 500 thousand rubles, and 3 or more years after the purchase, the owner successfully sold it for 650 thousand, i.e. received a benefit. But in view of the fact that the car was owned for more than three years, the seller is not obliged to pay tax on such a transaction.

If the above methods do not allow you to avoid paying tax, you can count on cost reductions in accordance with the tax deduction, amounting to 2014 thousand rubles for 250. This means that 250 thousand will be deducted from the amount received by the seller, and from the remaining money he will have to pay tax. For example, the car was sold for 750 thousand. The seller himself bought it cheaper, or she stayed in his property for less than 3 years, or he did not have a purchase agreement. In such a situation, the tax will be as follows: (750000-250000) x0,13 = 65000 rubles.

If the car was sold for 250 thousand or less, you will not have to pay tax. The right to a tax deduction is granted to an individual no more than 1 time per year.

Tax on the sale of a vehicle by proxy

 You can avoid paying tax if you sell the car by proxy. If we consider such a transaction from a legal point of view, a general power of attorney is not a contract of sale, but simply a transfer of the right to drive a car to another person while maintaining the previous owner.

If the car is sold according to such a document 3 years or more after the purchase, you don’t have to think about paying taxes. If the owner has owned the vehicle for less than 3 years, the following problem may appear. The new owner, who manages the car by proxy, decides to sell it before the 3 year deadline. In such a situation, according to the law, the first seller becomes the taxpayer, i.e. the one who sold the car under a general power of attorney.

Tax payment procedure: main rules

The declaration must be submitted to the tax office by April 30 of the year following the year of sale. That is, if the car was sold, for example, in December 2014, the income must be declared before April 30, 2015. Directly taxes are paid before July 15.

When you go to the tax office, you need to take with you:

1. Passport;
2. Completed declaration 3-NDFL. Get it in advance and fill it out according to the example given in the place of payment of taxes;
3. Taxpayer code;
4. Vehicle passport. Submission of a copy is allowed;
5. Contract of sale of the vehicle;
6. Documents confirming the receipt of monetary benefits for the transaction.

After receiving the listed documents, the service employee will issue a document to the taxpayer indicating the amount payable. Payment is usually made at a bank branch.

Recommendations to the vehicle owner

The following simple recommendations will help you avoid unnecessary expenses and problems with the tax office.

Be sure to keep the original documents, in any way related to the purchase and sale of the machine.

The seller must keep the contract of sale and documents that can confirm the facts of expenses and income from the transaction. If you want to save money and there is no urgency, it is better to wait until a three-year period has passed from the date of purchase of the vehicle.

Selling cars is a rather complicated procedure, in particular due to the peculiarities of taxation. The seller is strongly advised to study the applicable rules for the collection and payment of such taxes before making a transaction.

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