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Used Cars/Selling vehicles for side income



I am a automotive mechanic and would like to get into buying, fixing up, and the selling them for side income.  Naturally I have some questions relating to the legal side of things and hopefully you can answer them or at least point me in the right direction.  

I read on another answer site that in the state of NJ there is not limit on the number of cars a person may sell privately and not as a dealer.  Rather, there are certain requirements for someone who wishes to sell as a dealer.  Is any of this true and could you elaborate more?

Aside from that I am concerned as to the legality of buying selling cars and making money.  

If it is true that I could buy and sell as many cars as I want would there be a point at which I must report on income to the state or IRS?  

How much would I have to make in order to be legally required to report this as income?

I can't help but think that there has to be a point where I would be legally considered a business and must get a dealer license.  Any info in that regard?

Thank you for taking the time to answer my questions.

Hello Nate, thanks for your question. I am in Michigan so I may not be much help for you in your state but I'll try.  Here we can buy up to 5 vehicles a year without needing a dealers license. The 6th vehicle would trigger a phone call or letter from the DMV. If you plan on buying and selling more than one a month I would recommend you look into getting your dealers license. It may not be as hard as you think.  As far as the IRS is concerned they want you to report any income above $10300 per year. If you have a full time job making more than that you are supposed to list it on your 1040 tax forms under Schedule D or the "Capital Gains" category. It is very difficult to buy and sell car "legally" without paying income tax or getting a license.  The states make it that way to keep people paying the correct amount of sales tax.  We all know someone who has bought a car or truck for $3000 and fill out the title to say $500.  The states know this goes on and that's why the have the limits on how many are allowed a year.  Good luck, I hope it works out for you.
You can also get a lot of info here.žion=State+Regulatio

Take care,  Shane  

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Understanding how your credit report is used when purchasing a vehicle. Understanding the "Simple Interest Contract". When to put money down and why. I can give you some basic questions to ask the dealer befor signing your papers. I can answer about any question you have about buying a used car from a dealer. I am in Michigan and laws do vary from state to state. I will always try to help with any question regarding used cars.


I have been a Sales Manager as well as doing Finance for dealers for 19 years, Sub Prime or Special Finance as it is referred to in the buisness. I also have sold cars at Chevy and Ford dealerships for the last 16 years

General Store Manager since 2009 and 19 total years of on the job experience.

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