Selling Stuff Online: Do You Owe Tax?
Cleared out your closet on Poshmark, sold an old couch on Facebook Marketplace, flipped a used bike on eBay — and now you're wondering if the IRS wants a cut. The answer, for most people, is no. Here's where the line actually is.
Personal items
No tax
If sold at a loss
Sold at a profit
Capital gain
Taxable
Running a resale biz
Self-employment
Schedule C
1099-K
Informational
Not automatically taxable
The Short Answer
The rule is simple and almost intuitive: you owe tax on profit, not on selling your own stuff at a loss. Most people selling used personal items sell them for less than they paid — and that's not taxable. It's only when you sell something for more than you paid, or you're effectively running a resale business, that tax enters the picture.
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Selling Your Own Stuff (Usually No Tax)
Sell a $500 couch for $100? No tax — you took a loss, and losses on personal items aren't deductible, but they also aren't taxable. This covers the overwhelming majority of Facebook Marketplace, Poshmark, and eBay sales: you're selling personal belongings for less than you paid. No reporting, no tax.
Selling at a Profit (Capital Gains)
Sell something for more than you paid — a collectible, a rare item, a car that appreciated — and that profit is a capital gain, taxable at 0/15/20% for long-term holdings. Most everyday household items lose value, so this is the exception, not the rule. But if you're flipping things that go up in value, that's taxable.
When It Becomes a Business
Here's the real line. If you're buying items specifically to resell at a profit — thrifting, sourcing products, flipping for income — that's a business, not "selling your old stuff." In that case, your net profit is self-employment income, reported on Schedule C, and subject to self-employment tax. The difference is intent and regularity: the occasional closet clear-out is not a business; consistent buying-to-resell is.
What That 1099-K Means
Payment platforms and marketplaces may send you a Form 1099-K when your transactions cross a reporting threshold. Don't panic when you get one — it reports your gross payments, not your profit. If those were personal items sold at a loss, you still owe no tax; you just need to be able to show that with records. Keep receipts or notes on what you paid, in case the IRS asks.
Frequently Asked Questions
Do I have to report every eBay sale?
No. If you sold personal items at a loss, there's nothing to report (and no deduction for the loss). Reporting only becomes relevant for gains or business reselling.
What if I got a 1099-K but sold at a loss?
You can still owe no tax — the 1099-K is informational. Keep records showing your original cost, so you can explain the loss if the IRS asks.
When does casual flipping become a business?
It's about intent and regularity. Buying items specifically to resell, doing it repeatedly, and treating it like income points to a business. An occasional sale of personal items does not.
Can I deduct a loss on personal items?
No. Losses on personal-use property are not deductible. Only business inventory losses (from a resale business) can be deducted.
Sources
- IRS — Form 1099-K reporting and personal-item sales guidance.
- IRS — capital gains on the sale of personal property.
- IRS — hobby vs. business (self-employment) rules.
This is informational, not tax advice. Whether your activity is a hobby or business depends on the specific facts.