🔰 Asking a Tax Accountant: What is Capital Gains? Does it apply to Mercari or Golf Memberships?
What does tax law look for behind the scenes when you say, 'I made a profit from selling!'?
【Characters】
Mika: Someone worried about whether selling unwanted items will be taxed.
Professor: A tax accountant who thinks about taxes before prices when looking at old hanging scrolls.
What are capital gains?
Mika: Professor, does tax apply to everything if I make a profit from selling something?
Professor: No. The profit obtained from transferring assets is called 'capital gains,' but not everything is subject to taxation.
Mika: Does transfer mean selling?
Professor: It is not just selling.It includes all acts of transferring assets, such as exchanges, auctions, property divisions, and contributions in kind.
Mika: So in the world of tax law, saying 'goodbye' to an asset is a transfer.
Professor: That is correct. No matter how you part ways, tax law is watching.
What kind of things become capital gains?
Mika: Is it just land and stocks?
Professor: It is much broader than that.
It includes a wide range of items such as land, buildings, stocks, golf memberships, gold bullion, jewelry, antiques, ships, copyrights, and patent rights.
Mika: Even antiques?
Professor: Yes. Tax law is also interested in old Imari ware.
However, monetary claims such as loans and accounts receivable do not become capital gains.
Are clothes sold on Mercari taxed?
Mika: What about selling clothes and furniture on Mercari?
Professor: You can rest easy there.
As a general rule, selling movable property normally necessary for daily life, such as furniture, home appliances, cars used for commuting, and clothing, is not taxed.
Mika: Decluttering enthusiasts across the country are relieved.
Professor: However, there are exceptions.
Items such as jewelry, precious metals, paintings, and antiques that exceed 300,000 yen per piece or set can be subject to taxation.
Mika: What if my grandfather's vase is worth 5 million yen?
Professor: That vase might suddenly become very well-acquainted with the tax office.
Stocks and land are calculated separately
Mika: Is it the same for stocks and land?
Professor: No, it is not.
Land, buildings, and stocks are subject to separate taxation.
The tax amount is calculated separately from salary income or business income.
On the other hand, many items like golf memberships and gold bullion are subject to comprehensive taxation.
Mika: So even though they are both capital gains, they belong to different groups.
Professor: Tax law classifications are complex.
Golf memberships are also capital gains
Mika: Golf memberships too?
Professor: Yes.
If you sell them for more than you bought them, it becomes a capital gain.
Mika: Not just a nice shot, but a nice tax as well.
Professor: The tax office looks at profits rather than scores.
Is it still a transfer if you give it to a company for free?
Mika: What if I give my land to a company for free?
Professor: That is the scary part.
Even if you donate it to a corporation, it may be deemed as having been transferred at market value.
Mika: Even though I gave it away for free?
Professor: Tax law sometimes looks at the "intrinsic value" rather than the "actual price."
Mika: So, kindness can also be taxed.
Professor: Tax law does not deny good intentions, but it does not forget market value either.
Is continuous buying and selling considered business income?
Mika: Recently, there are people who resell large quantities online, right?
Professor: That is also important.
If you are buying and selling continuously, it may be classified as business income or miscellaneous income rather than capital gains.
Mika: Selling as a hobby is different from selling as a business.
Professor: If you list items on Mercari every day, tax law may also consider it a business.
Example 1: Selling a personal car
Mika: I sold a car I bought for 3 million yen for 1 million yen.
Professor: Since it is personal property, it is usually not taxed.
Mika: That's a relief.
Example 2: Selling gold bullion
Mika: I bought gold, and since the price went up, I sold it.
Professor: This is subject to capital gains tax.
It is combined with income such as salary and becomes subject to comprehensive taxation.
Mika: Gold prices are high lately, so we need to be careful.
Example 3: Selling land
Mika: I sold land I bought a long time ago and made a profit.
Professor: The transfer of land and buildings is subject to separate taxation.
It is calculated separately from other income.
Mika: So land is treated specially, then.
Professor: Even tax law gives special consideration to land.
Summary
Mika: How should I remember this in the end?
Professor: Like this.
"Profits from selling assets are often considered capital gains."
"Selling personal belongings is generally tax-exempt."
"Land and stocks are calculated separately, and continuous buying and selling may be considered business income."
These are the three points.
Mika: Please give us one final word.
Professor: Tax law looks at 'what was sold,' 'how continuous the activity is,' and 'what the asset was for.'
Mika: In other words, selling old clothes is different from running an online shop every day.
Professor: That is correct.
Tax law properly distinguishes between 'clearing out unwanted items' and 'doing business.'