Selling personal property is taxable only when you sell the item for more than you paid for it. That profit is a capital gain, and the IRS expects you to report it. If you sell at a loss, which is what happens with most used furniture, clothes, and electronics, you owe nothing, but you also can’t deduct the loss.
When a Sale Actually Creates a Tax Bill
Almost everything you own is a “capital asset” under federal tax law, with narrow exceptions like business inventory or depreciable trade equipment.1Office of the Law Revision Counsel. 26 USC 1221 – Capital Asset Defined Your car, your couch, your laptop, the watch in your drawer: all capital assets. Because you bought them to use rather than to resell, the IRS calls them “personal use property.”
Personal use property follows an asymmetrical rule. Gains are taxable. Losses are not deductible. Sell a boat for $5,000 more than you paid and you owe tax on the $5,000. Sell it for $5,000 less and the loss disappears for tax purposes. The reasoning is that the drop in value reflects your personal use of the item, closer to consumption than to an investment loss.
Items that straddle the line between enjoyment and investment, like rare coins, art, antiques, and jewelry, can be treated as investment property if appreciation was your main reason for holding them. That classification matters mostly for losses (deductible for investment property, not for personal use). Gains are taxable either way.
How to Figure Out Your Gain
The calculation is simple: selling price minus adjusted basis equals your gain or loss.
Your basis starts with what you paid, including sales tax, shipping, and other acquisition costs. Add any capital improvements that increased the item’s value or extended its life. Routine maintenance doesn’t count. That total is your adjusted basis.
Your selling price is everything you received from the buyer, less direct selling costs like platform fees, advertising, or commissions.
Buy an antique desk for $3,000, spend $800 on restoration, sell it for $7,000 with $200 in listing fees, and your taxable gain is $3,000. If the same desk only brings $2,500, you have a $1,300 loss that you cannot deduct.
What If You Don’t Have the Original Receipt
You are responsible for proving your basis, and the IRS won’t take your word for it. Without a receipt, you can reconstruct value using comparable sales of similar items from around the time you bought yours, the replacement cost of a similar new item reduced for age and wear, or a written appraisal from a qualified appraiser.2Internal Revenue Service. Publication 561 Determining the Value of Donated Property For vehicles and boats, commercial pricing guides that track dealer sale prices can support your figure.
Bank and credit card statements, old emails, and dated photos all help. Keep the records at least three years after you file the return that reports the sale.
What Rate Applies to the Gain
The tax rate depends on how long you held the item. The dividing line is one year.
Short-Term Gains
Held for a year or less, the gain is short-term and taxed at your ordinary income rate, which runs from 10% to 37% for 2026.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 A $2,000 short-term gain on a piece of jewelry is taxed exactly like $2,000 in extra wages.
Long-Term Gains
Held for more than a year, the gain qualifies for lower long-term rates. For 2026, single filers pay 0% on long-term gains if total taxable income stays below $49,450, 15% up to $545,500, and 20% above that.4Internal Revenue Service. Topic No. 409, Capital Gains and Losses For married couples filing jointly, the 0% bracket covers income up to $98,900, and the 20% rate begins above $613,700.
The Collectibles Rate
Long-term gains on collectibles are capped at 28% instead of the standard 20% maximum.5Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed The IRS defines collectibles broadly: artwork, rugs, antiques, precious metals and gems, stamps, most coins, and alcoholic beverages held as investments.
The 28% is a ceiling, not a flat rate. If your income puts you in the 15% long-term bracket, you pay 15% on your collectibles gain. The 28% only applies when your ordinary rate would otherwise push you above it. For high earners selling a valuable painting or a gold coin collection, the rate runs noticeably higher than the 20% they would pay on stocks held the same time.
Net Investment Income Tax
High earners may owe an extra 3.8% Net Investment Income Tax on top of the capital gains rate. It applies to the lesser of your net investment income (which includes capital gains) or the amount by which your modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married joint filers.6Internal Revenue Service. Net Investment Income Tax Those thresholds aren’t indexed for inflation, so they haven’t moved since 2013.7Internal Revenue Service. Questions and Answers on the Net Investment Income Tax
Stacked at the top, a high-income long-term sale of a collectible could reach 31.8% (28% plus 3.8%). For non-collectible personal property, the combined ceiling is 23.8%.
Inherited or Gifted Items Follow Different Rules
If you didn’t buy the item yourself, your starting basis changes, and the difference can be large.
Inherited Property
When you inherit personal property, your basis is generally the item’s fair market value on the date the previous owner died, not what they originally paid.8Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent This “stepped-up basis” is one of the most favorable rules in the code. If your grandmother bought a painting for $500 in 1975 and it was worth $15,000 when she died, your basis is $15,000. Sell for $16,000 and you owe tax on $1,000, not $15,500.
Inherited property also gets automatic long-term treatment. Even if you sell the week after inheriting, the gain qualifies for the lower long-term rates.9Office of the Law Revision Counsel. 26 USC 1223 – Holding Period of Property
Gifted Property
Gifts are less generous. Your basis is generally the donor’s basis, meaning what they paid.10Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gifts and Transfers in Trust Your uncle paid $2,000 for a watch, gave it to you when it was worth $8,000, and you sell it for $9,000. Your gain is $7,000.
A wrinkle applies when the item was worth less than the donor’s basis at the time of the gift. In that case, you use two figures: the donor’s basis for computing a gain, and the lower fair market value at the time of the gift for computing a loss.11Internal Revenue Service. Property (Basis, Sale of Home, Etc.) If your selling price lands between the two, you have neither gain nor loss.
Why Losses on Personal Items Don’t Help Your Return
When you sell personal use property at a loss, you cannot deduct that loss against other income or against other capital gains. The IRS treats the drop in value as part of the cost of owning and using the item, similar to a new car depreciating after you drive it home.12Internal Revenue Service. Publication 544 (2025), Sales and Other Dispositions of Assets
Investment property works differently, and mixing the two on a return is the kind of error that draws IRS attention. A $10,000 loss on stocks offsets $10,000 of gains. A $10,000 loss on a personal car does nothing.
One narrow exception: personal property destroyed, damaged, or stolen in a federally declared disaster can produce a deductible casualty loss, after subtracting $100 per event and 10% of your adjusted gross income from the total.13Internal Revenue Service. Publication 547 (2025), Casualties, Disasters, and Thefts Everyday losses from accidental damage, wear, or misplaced items don’t qualify.
Form 1099-K From eBay, Etsy, and Similar Platforms
If you sell on eBay, Etsy, Poshmark, Facebook Marketplace, or similar sites, the platform may send you a Form 1099-K reporting your gross sales. Under the threshold reinstated by the One, Big, Beautiful Bill, a platform must file a 1099-K only when your gross payments exceed $20,000 and you have more than 200 transactions in a calendar year.14Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill Both conditions have to be met.
Getting a 1099-K does not mean you owe tax. The form reports gross proceeds, not profit. If you sold $25,000 of used clothes and household goods that originally cost you $40,000, you lost money and owe nothing. You still need to address the form on your return so the IRS doesn’t treat the whole amount as unreported income.
Reporting Personal Items Sold at a Loss
You have two options. Report the gross amount at the top of Schedule 1 (Form 1040) and enter an offsetting adjustment for your costs (capped at the sale amount) on the same form, zeroing out the income. Or report the sale on Form 8949 and Schedule D with code “L” to flag the loss as nondeductible.15Internal Revenue Service. What to Do With Form 1099-K Either method keeps you from being taxed on money that wasn’t profit, but neither converts the loss into a deduction.
When the 1099-K Includes Personal Payments
If the form includes payments that weren’t sales, like reimbursements from friends or split dinner bills sent through Venmo, contact the payment platform listed under “Filer” on the form and ask for a corrected 1099-K showing zero.15Internal Revenue Service. What to Do With Form 1099-K File on time anyway. Only the issuer can fix the form.
How to Report a Taxable Sale
Report the sale on Form 8949 (Sales and Other Dispositions of Capital Assets) and Schedule D (Capital Gains and Losses).16Internal Revenue Service. About Form 8949, Sales and Other Dispositions of Capital Assets On Form 8949, list the property, the date you acquired it, the date you sold it, the sale price, and your adjusted basis. The form separates short-term and long-term transactions.
The totals flow to Schedule D, which computes your net capital gain or loss and handles the 28% collectibles calculation. The result carries over to your Form 1040. You need to complete these forms even for a single taxable sale.
Penalties for Not Reporting
Failing to report a taxable gain can trigger the accuracy-related penalty of 20% of the underpaid tax.17Internal Revenue Service. Accuracy-Related Penalty Sell a collectible for a $10,000 long-term gain, owe $2,800 in tax, and the penalty alone is $560, plus interest from the original due date.
The IRS increasingly catches unreported sales through 1099-K matching. If a platform reports $25,000 in gross proceeds and nothing appears on your return, expect a notice. Report every taxable gain, keep your purchase documentation, and if you sold at a loss, show your work so the IRS can see why you don’t owe anything.
State Tax on Personal Property Sales
Federal tax is only part of the picture. Most states with an income tax also tax capital gains, with rates typically running from about 2% to over 13%. Some states tax capital gains at the same rate as ordinary income. A few have no income tax at all. Check your state’s rules before assuming the federal bill is the only one coming.