Is My Yard Sale Tax Deductible?

This week we hear from Mike in Owings Mills:

Dear Alice,

Do I have to claim the money I received from the big yard sale I had last fall?

Mike

Dear Mike,

That is a really good question. Typically, any income you receive is taxable. Even the $10 you get for doing jury duty is taxable and supposed to be claimed as income.

There are a couple of instances where money you receive might not be taxable: Gifts you receive are not taxable to you. Sometimes the person giving the money may have to pay a gift tax, but it’s not taxable to the recipient. Yard sale income is usually not taxable to you, as long as what you paid for the items you are selling is more than what you got in your yard sale.

Here’s how it works: almost everything you own and use for personal purposes, pleasure or recreation is a capital asset, so are stocks and bonds you hold for investment. If you sell a capital asset for a profit (meaning you get more for it than you originally paid) you must pay tax on the gain. On the other hand, if you have losses, you can only take losses on investment property; losses on personal property are not deductible.

It hardly seems fair, I know, but the good news is that everything you sold in your yard sale probably sold for less than what you originally paid for it, so you’re off the hook for reporting that income. However, if you found you had something valuable that sold for more than what you paid for it, the gain is taxable to you and should be reported on Schedule D of your tax return. There are special rules for collectibles, so read the instructions thoroughly when reporting gains on those.

Many Happy Returns!

Alice A. Reid, EA

Disclosure: The nature of taxation is complex and information used to complete your personal tax return is dynamic – meaning that one area of your tax return can affect others, while our goal is to provide you with good general information, IRS may require certain documentation or substantiation to support any tax position you take on your tax return. If your issue is complex we recommend you talk to a tax professional who can better understand your entire tax situation and advise you appropriately.