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Yard sales go by a variety of names including garage sales, and rummage sales. However, no matter what you call them, the purpose is the same which is to get rid of items you no longer want. One of the biggest issues that yard salers ask themselves is “How much do I charge for yard sale items"? Here are some tips for yard sale pricing as well as how to determine when to report the income to the Internal Revenue Service (IRS).
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Determine the Used Value of Yard Sale Items
The standard rule for pricing yard sale items is that the price should be approximately 10 to 20 percent of how much the item sells for new in a store. The first place to start is by looking up the price of a new item online at a variety of retail websites. Once you have the price of a new item, you can simply calculate 10 to 20 percent of it and set the price of the yard sale item at that number. There are some great yard sale pricing lists to get you started that include various items from clothing, electronics, DVDs, CDs and books.
If you have a unique item that is no longer sold in stores, such as an antique, visit online auctions sites to see how much they are selling the item or similar items, for and set the price in that range.
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Consider the Condition of the Item
After you have the price in mind examine the item carefully for scratches, tears, chips and test electrical items to make sure they work. If the item is damaged in any way, consider dropping the price to help it sell faster.
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Setting Prices for Items in a Group
If you are selling items in a set, such as dishes, you have two options for setting the yard sale pricing. You can either price each item separately or develop a single price for all of them. In general, the set should cost less as a whole than the individual pieces to entice customers to buy them all. In addition, if the items are priced as a set, make sure to place them all in a box or tape them together so that buyers will know this.
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Add Some Padding to Yard Sale Pricing
Since part of the fun of a yard sale is haggling, you can expect your buyers to ask for a discount on almost everything. So after you have established what the proper final pricing is for each item, add anywhere from 25 to 50 percent so that you will have plenty of room for negations.
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When and How to Report Yard Sale Income to the IRS
The majority of people who have yard sales are not required to report the income to the Internal Revenue Service on their income taxes. The IRS waives taxes on yard sale items because they are occasional income and sellers receive less income for the item than they originally paid for it.
One exception to the rule is if you sell an item for more than you paid for it originally. For example, if you purchase a painting for $30 and then sell it for $3000, the difference in the price is considered capital gains and you must report it. Another exception is if you hold yard sales on a regular basis it becomes akin to running a small business. Although there is no clear income line for yard sale proceeds with the IRS, if the yard sale income begins to approach 30 to 40 percent of your annual income, you should start reporting it to be on the safe side. If you fall into the small category of people that must report yard sale income, you do so on a standard 1040, Schedule C.
Setting pricing for yard sale items is one of the most important steps since the goal is to get as much money as possible. So stop asking yourself "How much do I charge for yard sale items?", and use these tips to have a profitable yard sale, while still giving your buyers a good deal.
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- TaxLitigation.net: http://www.taxlitigation.net/taxlaw/are-garage-sale-proceeds-taxable/