Collecting cars is a stellar hobby. Unfortunately, collector cars aren’t tax free. There are a few things you should know about collector cars and taxes to keep you out of hot water with the IRS.
Here are some of the most common tax questions about classics answered.
Can you write off a classic car?
As a collector car, you probably cannot write it off. However, if the car is used in your business or trade and it is subject to at least some wear and tear, or decline. If so, then it may be eligible to be written off.
What qualifies as a collector car?
Different people and different organizations have differing opinions about what vehicles qualify as collectibles. Many can’t even agree on the definition of a classic. A good rule of thumb to follow is if the car is 20 years old. Antique cars are more than 45 years old.
What are the deductions and taxes on collector cars?
Collector cars are considered property, so collector cars are often taxed. Capital gains tax on collectible cars have a flat 28% tax rate.
What happens when you sell a collector car?
You can write off some expenses associated with restoring a collector car that you are selling. You can deduct some of the money you put into the car as you restored it, but you need to keep exceptional records with receipts.
If you are unclear about any of the collector car tax laws, it is a good idea to talk to an attorney or financial advisor who specializes in that area. They can give you advice and guide to so that your best interests are served.
Are you looking for a great collector car to add to your collection? Woodside Credit can help you make it yours. Our low payments and easy terms mean you can have that cool collectible in your garage in no time. Contact us today to find out how we can help you.