Selling a car for cash?

[SteveSS]

It used to be a cashier's check was the way to buy and sell cars. With modern fraud methods cashier's checks can be faked unless you go to the bank together. Some people demand cash now days. I forget what amounts the banks now report deposits. I've always liked the fact that profit on a car sale wasn't reported to the IRS. Do the banks report deposits to the IRS. Who are they reporting deposits to? Wire transfers would work but they still get reported I would think.

Let's say you bought a car for $10k. Then you sold it for $20k. It seems wrong to tax someone on any of that amount. Who knows how much you spent on parts, on a paint job, etc.

 

[ckessel]

I do cash or USPS money order. If the person screws up on the MO, it's a federal offense. Still prefer cash though. Stash it away in the safe. Registration prices, at least here, are set by the purchase price. I "bought" my wagon for $1500.00. Am going to help whoever buys my truck with similar "purchase" price. I'm getting nailed for $500 per year on my 20+ year old truck since it was based off the purchase price plus the PRC added more over time.

 

[Sam69sat]

It used to be a cashier's check was the way to buy and sell cars. With modern fraud methods cashier's checks can be faked unless you go to the bank together. Some people demand cash now days. I forget what amounts the banks now report deposits. I've always liked the fact that profit on a car sale wasn't reported to the IRS. Do the banks report deposits to the IRS. Who are they reporting deposits to? Wire transfers would work but they still get reported I would think.

Let's say you bought a car for $10k. Then you sold it for $20k. It seems wrong to tax someone on any of that amount. Who knows how much you spent on parts, on a paint job, etc.

Accept cash or gold and don't deposit it.

 

[XS22J8R]

Last car I bought the guy only would take cash. It was sort of a pain seeing how he was out of state. And when I went to the bank to withdraw the money they didn’t have that much on hand and had to order it, and me come back a different day to pick it up.
It wasn’t a huge dollar car purchase, I can’t imagine trying to do that for a 6 figure car purchase.
Traveling to make a cash car purchase is risky, you might get pulled over and the money stolen by the police thanks to civil asset forfeiture.
As far as only taking cash, that can have challenges too. What do you do with 10s of thousands in cash? Take it to the bank to deposit and that will get reported to the government.
I heard about a guy who sold a hemi Charger for cash and it was about a $200,000 sale. He put the money in a safe deposit box, and had a big dilemma figuring out how to do anything with it without facing government scrutiny.
And with profits on a sale, it’s capital gains as far as the IRS is concerned. Save all receipts for restoration and parts and whatever. If you buy a car for $10,000, sink 10,000 into it, then sell someday for $25,000, you don’t owe tax on $15,000, you owe capital gains tax on $5000 assuming you’ve had the car over a year making your profit long term capital gains.

 

[cr8crshr]

Any deposit of 10K or more will be reported to the IRS. Not fair, but it is what it is, I guess...cr8crshr/Bill

 

[71RRHI]

Any deposit of 10K or more will be reported to the IRS. Not fair, but it is what it is, I guess...cr8crshr/Bill

Any deposit or withdrawal of 10k or more requires the bank to submitt a currency transaction report.

 

[XS22J8R]

Any deposit or withdrawal of 10k or more requires the bank to submitt a currency transaction report.

another possible problem is depositing smaller amounts in a short time period, which the bank might report as "suspicious activity". In some cases banks have even closed customers accounts because the banks have systems to flag customers financial activities that might be illegal. And they'll err on the side of caution by closing an account rather than risk getting in trouble with the government.
So when selling a car or other valuable item, it's best to not playing any games trying to hide the proceeds unless you're already experienced in "laundering money".

 

[matthon]

I bought a car decades ago and had to drive cross country to get it.
I put shorts on with pockets and put the cash in the front, then put jeans on over.

It wasn't necessarily going to prevent finding in a full on search, but I didn't have to worry about it falling out, or fumbling around getting keys or a wallet out, or worse it dropping out on the ground.

It was always on me, didn't have to leave behind in the truck at rest stops, and if needed, I could turn my pockets inside out with nothing there.

 

[Rishi]

it’s capital gains as far as the IRS is concerned.

If the cash deposit amount is large enough, and the IRS becomes aware of it, AND if you're audited, only then, will you need to prove what your "profit" actually was and pay income tax on that.

As of this writing in 2025, the Federal reporting threshold by banks is $10,000, where Verafin (software) is required by federal law to file a Currency Transaction Report (CTR). Verafin also analyzes deposits broken into smaller chunks, across differing accounts, and will kick out a Suspicious Activity Report (SAR) when detected.

Unless you can launder a large amount of cash, one must keep it and spend it as cash, which is getting harder and harder to do in our modern digital age of debit cards. Unless, you buy and use prepaid Visa cards. You can pay your bills with those cards, and save the legitimate cash for better things.

 

[Davefinan]

15 years ago I sold a 68 gtx convertible for 65k. The out of state buyer was to wire money to my bank account. Being that this would be like a nest egg for me, I started doing homework. Checked with my bank manager on any possible way problems with bank wires and he described them as being very safe. I said what if I release the car and a problem with the wire came up afterwards, what could happen?
He told me that since the money was in their bank they could still retrieve it , as in remove it from my account. I’m sure you know what I did when the money arrived.

 

[matthon]

BTW, cashier's checks and/or certified checks from the bank protect the bank, not the customer, even though the customer sometimes has to pay a fee.

 

[Richard Cranium]

As far as only taking cash, that can have challenges too. What do you do with 10s of thousands in cash? Take it to the bank to deposit and that will get reported to the government.
I heard about a guy who sold a hemi Charger for cash and it was about a $200,000 sale. He put the money in a safe deposit box, and had a big dilemma figuring out how to do anything with it without facing government scrutiny.

200 grand in cash is not a problem at all. You just pay for everything you can in cash such as groceries, property taxes, house repairs, dinners out. Because everything is so expensive today, you'd be amazed how fast you can spend money.

 

[eldubb440]

Cranium walks around with a briefcase