Taxes when selling your watches

So since my Seiko collection is still growing and I started culling some watches which I don't wear or are not in a good enough condition, or I just have too much spares, I started wondering - do I have to pay taxes when selling them?

Honestly speaking, I buy way more than I sell, and I am not making much on the selling if anything(if I count the time I spend on communication, photos, descriptions, going to a courier to ship the item and so on - I would say I am losing, since time ain't free and it's very time consuming).

I've only sold 2 watches so far btw but it took way too much time for what's maybe 30-40$ on watch. Which certainly doesn't cover the cost of the work going into the sales. Of course as a Seiko collector, I need to resell the stuff I don't want to have funds for more watches.

From a tax perspective, I am spending this money on more watches, and I would say it's net loss since I put it work that costs way more than 30-40$. Of course it's even trickier because when selling stuff you might not even know for how much it was bought. And of course there's also inflation, so if you bought something sometime ago and sell it now for more it could still be less after calculating it.

Ideally I would probably want to sell 1-2 watches a month to reduce my numbers and to fund more watches I want. However I don't want to have to pay taxes since this is not a business and I am not making money, worse even I am losing because I spend way too much time to make a sale. So if possible I would just declare net loss. The work I put into selling stuff isn't free. I think this is fair.

So normally when you sell in Private Sells, on eBay or Chrono24, do you pay taxes?

This question is for collectors and not dealers or people making a livelihood out of watch sales.

Reading the EU laws, it seems for sales under 2000€, websites such as Chrono24 don't have to report anything - DAC7. Right now I am under this limit since I've only sold 2 watches. But if I start selling 1-2 watches a month, I would easily go over.

It's probably different for every country but perhaps we should discuss at least EU and USA.

Note: this post doesn't encourage tax evasion for people making a livelihood out of reselling watches. It's about collectors trying to build a collection without being hustled for money.

I just read some tax laws, it says no tax if you bought the watches for personal use. However my personal use means lots of watches, not 5-10. A collection is personal use I think. I would posit even 100-200 watches is personal use if you're a collector. To non-watch people this may seem ludicrous, but then again any collection is like that. And I am not making profit.(counting my time spent on the 2 sales I made, I would say you could make more profit looking for dropped coins near a grocery store counter)

Btw 20k a month in and out is not so much if you think about it too. Depends on the type of watches. You can easily buy 3-4 watches and sell another 3-4 without making any profit. It's all relative. You don't have to be a millionaire to swap watches costing 20k over and over. It's like moving 1 litre of expensive liquor into a different bottle every month. You don't get more of it.

My CPA family members told me keep receipts and be prepared to prove my gain or loss, hopefully loss. Or just pay taxes on any proceeds, i.e., income when I do my yearly taxes. Personal use or not. Or don't and be prepared for scrutiny. Or don't and maybe there'll never be an issue.

What's CPA? Certified personal account?

Anyhow, I think if it comes to a tax audit, it's just a witch hunt. My personal opinion is that taxes should be looked in terms of assets, etc.

Because when it comes to it, what may look to one person like a big deal maybe just an impulsive buy to a millionaire. Ie. you might save for 1-5 or more years to buy a 30k $ watch, while someone else could buy 10 watches like this every year and sell half when he doesn't want them anymore. And it could be no big deal for that person .

So it's relative, what's a valuable Seiko collection to me, may be just a bunch of cheap watches to someone else.

Because even what I would like to call grail watches often come out for sale, but they are just out of my budget.

Think of it in this terms, if you spend 100$ daily, being asked about what you did with this 50$ or this that 50$ doesn't make sense. However you would remember if you suddenly spend 5000$ on something. However if you spent 2$ a day, you would remember if you spend 50$ on something. Again, all relative.

So yeah, of course the real world is often irrational, illogical and random. So I fully expect people wasting your time and annoying you to hell a possibility. Hence keeping receipts is best if you can get them.

You don't have to convince me. I couldn't care less what you do or what you sell, or buy, or do with your money. Yes, CPA is certified public accountant.

I am just speaking out loud.. babbling 😀
Because I am bored I suppose.

It's just, taxes are a weird concept.

Like if we directly exchange work, we would pay no tax and it's perfectly legal. There's no currency. But somehow tax is owed otherwise if I pay you 50$ to do work A and then you pay me 50$ to do work B, somehow we both owe tax. Despite the fact that we both have a net gain of 0$. Of course barter economy doesn't scale.

However taxes are totally enforceable at a company level or for people on a salary. Because I can't really go to a company and exchange work for their services. And people on a salary usually don't have an associated cost with their work so their entire salary is net gain.(perhaps only transport)

However say you are a painter, somehow you owe tax on your paintings without regard for the cost to produce them. It could be that you spend lots on actual materials and so on. So you could be making 5$ on a picture, despite selling it for 35$. So it seems the way forward would be to create a LLC so you can subtract the cost to produce the painting and properly only pay tax on the gains.

Now if you're a handyman, you would expect the client to pay for the materials used for the job and you wouldn't want to pay tax on them. You're only selling your work. The materials are bought by your customers and remain in his house. Of course you still have wear and tear on tools. Which should again be subtracted when you're being taxed. So again, perhaps an LLC is better.

The exemption for personal items is also weird, because if I somehow learned to make swords and made a few for myself, then they would be personal. But one day maybe I would sell one if someone asked me and pay no tax because.(weird example, but I would totally make swords if I had the time and space for a forge). Maybe this makes sense because I wouldn't be selling swords for a living. And the sword wouldn't have been made with the intent of profit.

Ideally I would prefer people to pay tax when it's fair to do so(no tax when you: give allowance to your children, buy gifts for friends, exchange work with friends/neighbors, sell personal items, etc.). But I don't think this means anything in legal terms. It's an entirely subjective concept.

The two things no one can escape: death and the IRS.

Many people are trying to find out how to cheat those two. I bet we will find sooner a solution for the former rather than the latter.

That pretty much sums it everywhere I think.

From everything I read about the laws and so on, it seems your government can randomly try to tax you on selling stuff and it's on you to dispute and prove you don't owe tax. So you just sell what you don't need anymore and hope for the best. And of course pay tax if you're making profit just in case.

Personally if I were a legislator, I would try make the following clause: When selling stuff that can't be easily proved to be for profit(ie. new, unused stuff), you shouldn't be taxed if the annual total amount is less than 10% of your declared annual income. This sounds a lot more fair to me. Of course it's just a personal view. But worst case people could only hide 10% of their income.