Q: I have a 2010 Nissan SUV that is in great operating condition and has a good body. My nephew in Denver needs a car for a new job that he will be starting. He will have to drive across the Denver metro area and his “college car” is on its last legs and is getting too expensive to repair and too unreliable for the needs he now has. I am selling my Nissan to my nephew for the trade-in value that we found on the internet for a car in “average” condition. This price is probably a bit lower than I could get from someone else but I also avoid any hassles of a private sale. My real question is how I report income from this sale. My nephew will pay me over 36 months.
A: You should have no income to report from this sale. From what I can tell the SUV has been a personal use vehicle of yours. I would certainly expect that you are selling for much less than what you purchased the vehicle for.
Unless you have had business use of the vehicle, so that you claimed depreciation deductions to reduce the tax cost, your sale will create a loss. This loss arose from personal use of the vehicle during which time it declined in value.
Personal-use assets sold at a loss do not allow you to claim the loss on your tax return. But there is also no income to report from the sale when there is no gain realized from the sale.