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Another RV Tax Question - Capital Gains?!?

J

Josh Kovac

Member
Wondering if anyone has experienced incursion of capital gains tax by selling their RV. I sold my RV-6A last year for more than the stated value I paid taxes against to the state of FL a couple of year ago. Is there any need to get into claiming a capital gain on the difference between the sale price and the value I paid taxes on?

Thanks,

Josh
RV-6A sold
RV-7 tail kit in the garage while I work through graduate school...OK, maybe the occational rivet...
 
Capital Gains

Depends upon whether you are an honest person or not. Tax law is written for honest people.

[ed. this sentence deleted by dr - talk of politicians. sorry Mannan <g>. dr]

Not trying to get political here. I'm an honest truthful person. I just wish the people who represent us were too.

Fess up, pay it and have a clear conscience.:D

My $0.02. Worth what you paid for it.;)
 
Last edited by a moderator:
Josh:
A few years back, while leaving my place of employment, I purchased the CT210 that I had been flying for many years. Price was based on book value, so when I sold it a few years later, my accountant booked the very hefty capital gain. If you choose to ignore this, just remember the tag line from "Dirty Harry". "Well, do you?"
Terry, CFI
RV9A, N323TP
 
So then......

When I sold my C172 for less that what I paid for it do I have a 'capital loss' tax deduction?

Kent
 
I called EAA and they confirmed if for me.... I need to pay up on capital gains.

He did say no you can't claim a capital loss for selling for less than you paid.

Thanks for your replies,

Josh
 
1031 Exchange

There is an interesting capital gains deferral if you are selling and buying a "like item." It is a little involved and requires some outside help but if you are looking at a big tax hit it is worth looking into. I have used it for several rental properties and once on a collector car trade.

http://www.irs.gov/irb/2004-33_IRB/ar13.html

John Clark
RV8 N18U "Sunshine"
KSBA
 
If you built the aircraft you are selling you can figure your labor in the cost.I don't think you will have a gain then.
 
Josh Kovac said:
Wondering if anyone has experienced incursion of capital gains tax by selling their RV. I sold my RV-6A last year for more than the stated value I paid taxes against to the state of FL a couple of year ago. Is there any need to get into claiming a capital gain on the difference between the sale price and the value I paid taxes on?

Thanks,

Josh
RV-6A sold
RV-7 tail kit in the garage while I work through graduate school...OK, maybe the occational rivet...
Click to expand...

It would seem appropriate, in determining whether there is a capital gain, to compare the selling price to the cost of the building it. It is also reasonable to figure about $15 hour for your time to build it. That's what an insurance company will give you to rebuild it after a wreck. That's how I would deal with it.

The declared value with regard to personal property tax has nothing to do it. That's between you and the state of Florida.
 
Check with your tax advisor

I'm still looking for the reference, but I believe you cannot increase your basis in an asset (thereby reducing the capital gain in the sale of that asset) by adding the value of your own labor. If someone is lucky enough to be in this situation, best to check with you tax advisor.
Any accountants/CPS's/tax professionals want to weigh in?
 
I understand that if you value your work time at $15 an hour, that is reasonable, and can be added to the value of the aircraft. However my understanding is that you now need to add that to your income. ie, If you spend 1000 hrs at 15$ an hour and wish to value that, then you need to add 15,000$ to your income tax, for that year. Also of course, you need to make sure you paid the self employment tax, state tax, and so on. This allows it to be added to the basis later of the item. Not worth it.
Make sure you value any upgrades you did however, as they become part of the basis, much as if you do an addition on to your home and sell it later.
The way the deal works is that if you make money on an investment, Uncle Sam is right there with you and wants his share, if your lose money, your on your own.
 
Ok...so I'm a little naive here but why would you pay capital gains. Are you talking about if you were using it for business and taking depreciation? I can't imagine why you would pay tax on something you sell in which you probably have not made any money on considering the cost of maintenance, upgrades, taxes paid, fixed costs, etc.
 
Cap gains

Capflyer said:
Ok...so I'm a little naive here but why would you pay capital gains. Are you talking about if you were using it for business and taking depreciation? I can't imagine why you would pay tax on something you sell in which you probably have not made any money on considering the cost of maintenance, upgrades, taxes paid, fixed costs, etc.
Click to expand...

Maintenance, taxes, and fixed costs don't count in this. The tax is on a capital gain, that is, the increase in value of the item. Not really an issue in most things vehicular unless you have a P-51. Until recently :( the big players in capital gains were real estate and stocks and bonds.

John Clark
RV8 N18U "Sunshine"
KSBA
 
The EAA rep who helped me was very clear that you cannot figure in your labor, operating or maintenance costs. Improvements to the plane can be included in my cost basis. I didn't upgrade my A/C before I sold it though.

Looks like the loopholes are closing fast on me.

I like the quote from 'Masterplumber': The way the deal works is that if you make money on an investment, Uncle Sam is right there with you and wants his share, if your lose money, your on your own.

Josh
 
You can certainly include some value for the cost of storage facilities (garage, hanger), insurance, and other tangible costs incurred prior to flight-worthiness during the building process, and even commuting costs (at standard mileage rates) and other things like meals paid for in support of building. Add it all up and you'll come very close to your actual sale price.

On the flip side, if you DO sell for a net loss you most certainly can offset that against any capital gains in the same year (but not, unfortunately, in other years). Thus, if you sell this year when most of us all have capital gains losses, you won't be able to offset the loss against any gain.
 
Not exactly what the IRS says....

breister said:
You can certainly include some value for the cost of storage facilities (garage, hanger), insurance, and other tangible costs incurred prior to flight-worthiness during the building process, and even commuting costs (at standard mileage rates) and other things like meals paid for in support of building. Add it all up and you'll come very close to your actual sale price.

On the flip side, if you DO sell for a net loss you most certainly can offset that against any capital gains in the same year (but not, unfortunately, in other years). Thus, if you sell this year when most of us all have capital gains losses, you won't be able to offset the loss against any gain.
Click to expand...

It is pretty similar to a collector car...

Losses from the sale of personal?use property, such as your home or car, are not deductible.

From here - http://www.irs.gov/taxtopics/tc409.html
 
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