I think it’s better to have receipts or records otherwise when you filing tax, you may have to pay tax on the 100% gain.
Paying taxes on consigned items advice
- Thread starter Chanbal
- Start date
I was talking with my accountant, he said that even HRMC (UK tax) won't think that you are making a profit if you sell a designer item for a lot less than what they cost, of course receipts make things easier, but if the things are fairly consistent with the same size and you are not regularly selling, not even tax will think that selling Chanel shoes for 100 is "a profit", you can't even find them for that price in any charity shop, I just wanted them to go to a good home, as my taste has changed a bit and I don't wear navy anymore.
I have a folder with old pictures when I wore the items, just to show that they are really personal items. I have moved countries several times in the last 20 years due to work, it would be absurd to keep all the receipts or bank statements that go back decades, but I am only selling the odd bits and bobs, to have a clear out. Not sure how it is in the US currently, but here you can have a clear out as long as you let them know if you are over a certain amount and the reason for it.
I think they are trying to find the professional resellers who don't declare and are actually treating it like a job, so if your previous tax returns show you barely paid taxes on income, you might have a problem declaring how you manage to sell a few high priced designer items that are "personal items".
They introduced the same rules and due to us moving soon again, well we are looking at 2 years (returning to the EU, civilisation again) I was a bit nervous, because I want to avoid packing a lot of stuff I won't wear again and filling out cutom forms, it's bad enough with hubby's guitar collecting "problem" we don't need to have tons of shoes and bags I will never wear again, but I think taxes work pretty much the same way all over the world, they try to get you wherever they can, but if you are able to proh my accounavide evidence that you're definitely not a reseller...
I had a long conversation with my accountant, he went "If you show them how much tax you are paying and how little you get back on items you owned but got rid of, then go 'if you do want to charge tax on the items, I can show you how much they regularly go for I can show evidence those are personal items, I already was taxed when buying them - am I due a refund?" there will not be an issue"
Frankly, I'm selling most of my items way below value (doesn't stop people from offering ridiculously low prices where I go "Not really, for that I rather donate it" - I am not kidding you, people think thatt a 5er for a Fendi baguette should be an offer I should entertain), I have little issue selling something very cheap if I know the item hwill be cherished, but had several occasions where it was a prominent resale business in London, and I found the item with zero tagged on. It does annoy me a bit, as I remember being a student and in love with an item, and I cherished it. I much rather take less, but know it found a good home... I'm odd this way, but I do think fashion is something to be enjoyed and cherished, not a reseller buying it cheap and reselling it for a massive profit. There is London based business that's notorious for it, I blocked at least 4 names of them...