You finally decide to get rid of the dining table that has spent the past three years collecting unopened mail. You list it on Facebook Marketplace for $350, accept an offer for $300, and receive the money through Venmo.
The old table is gone, and for one brief, beautiful moment, you feel like the sort of organized person who labels storage bins and an organized closet.
Then a less pleasant thought arrives: Do I have to pay taxes on that $300?
In most cases, probably not.
Most people sell used furniture, clothing, toys, electronics, and other household belongings at garage or yard sales for less than they originally paid. When that happens, there is generally no taxable profit, even if the buyer pays through Venmo, PayPal, Cash App, or another payment platform.
However, there are situations in which a garage-sale, yardsale, or Facebook Marketplace transaction can produce taxable income. The important question is not where you sold the item or how the buyer paid. It is whether you sold the item for more than it cost you.
Thought: One time when I was young I bought a Risk board game at a yard sale. I got home and eagerly opened the box, only to discover, to my horror, that it was filled with clumps of human hair. (I did not appreciate the irony)
The simple rule: used item profit can be taxable
Anyway, when you sell a personal item, compare the selling price with your cost basis. In plain English, your basis is usually what you originally paid for the item, although certain improvements and transaction costs can sometimes affect it.
Suppose you bought a bicycle for $800 and later sold it on Facebook Marketplace for $300. You lost $500 on the sale.
That loss is not taxable, but it is not deductible, either. The IRS does not generally allow taxpayers to deduct losses from selling personal-use property.
Now imagine that you bought an old lamp at a flea market for $25, discovered that it was collectible, and sold it for $425. In that case, you made a $400 gain, which generally must be reported.
The basic calculation looks like this:
Selling price − your cost basis = taxable gain
Here are a few examples:
| Item | Original cost | Selling price | Tax result |
|---|---|---|---|
| Sofa | $1,500 | $400 | No taxable gain |
| Television | $900 | $250 | No taxable gain |
| Vintage record player | $75 | $500 | $425 taxable gain |
| Designer handbag | $600 | $850 | $250 taxable gain |
| Children’s clothing | $300 | $50 | No taxable gain |
This is why the average neighborhood garage sale is not usually a major tax event. Most of the merchandise consists of items that have declined in value: old books, used appliances, outgrown clothing, scratched furniture, and a bread maker that seemed life-changing for approximately six days in 2018.
You may take in several hundred dollars during the sale, but receiving money is not automatically the same thing as earning a profit.
Are Facebook Marketplace sales taxable?
Facebook Marketplace sales follow the same basic federal tax rules as sales made at a traditional garage sale.
Selling your old lawn mower for less than you paid does not become taxable merely because you advertised it on Facebook. Likewise, a taxable gain does not become tax-free simply because the buyer handed you a wad of sweaty $20 bills in the driveway. (ew!)
The fact that you sold it on Facebook Marketplace, a garage sale, or yard sale doesn’t usually matter to the IRS.
What Facebook Marketplace does change is the paper trail. A traditional garage-sale transaction may involve two strangers, a hundred-dollar bill, and no documentation whatsoever. An online sale on a platform like Facebook Marketplace or Depop may produce messages, payment records, transaction dates, and possibly an information-reporting form.
That visibility can make the transaction feel more official, but it does not change a personal loss into taxable income.
For example, imagine that you purchased a sectional sofa for $2,200 and sold it through Facebook Marketplace three years later for $700. Even though $700 appeared in your Venmo account, you did not earn a $700 profit. You sold a personal item at a $1,500 loss.
That loss generally cannot reduce your other taxable income, but you ordinarily would not owe federal income tax on the $700 sale proceeds.
Does accepting Venmo make the sale taxable?
No. Venmo does not decide whether a transaction is taxable.
The same is true of PayPal, Cash App, credit cards, checks, and cash. The payment method may affect whether a transaction is reported to the IRS, but it does not determine whether you made taxable income.
For example: Suppose your neighbor pays you $200 in cash at your yard sale for a used grill that originally cost $600. You have no taxable gain.
Now suppose a Facebook Marketplace buyer sends you the same $200 through Venmo. The tax result is generally the same: you sold the grill for less than you paid.
Confusion often arises when a buyer marks a payment as being for “goods and services.” That designation may make the payment eligible for purchase protection and may cause it to be treated as a reportable commercial transaction by the payment platform. The Taxpayer Advocate Service has warned that a payment can potentially be categorized as a purchase even when it enters a personal account.
That still does not mean the entire payment is taxable. It means you may need records showing what you sold and what you originally paid.
What happens if you receive Form 1099-K?
Form 1099-K reports certain payments processed by payment apps, online marketplaces, credit-card companies, and other payment-settlement organizations.
Under the current federal rule, third-party settlement organizations generally must issue Form 1099-K when reportable payments for goods and services exceed $20,000 and involve more than 200 transactions during the calendar year. A platform may nevertheless issue the form at a lower amount.
The most important thing to understand is that Form 1099-K reports gross payments. It does not know:
- What you originally paid for the item
- Whether you sold it for a profit or loss
- Whether the transaction included shipping or fees
- Whether some payments were personal reimbursements
- Whether the buyer incorrectly marked a personal payment as a purchase
Receiving a form showing $2,000 of payments does not necessarily mean you earned $2,000 of taxable income. The IRS specifically notes that the amount reported on Form 1099-K does not account for the original purchase price, or basis, of the items sold.
Do not simply ignore the form, however. The IRS receives a copy, so the amount may need to be properly addressed on your tax return—even when the underlying items were sold at a loss.
If the form is incorrect, contact the issuer and request a corrected form. If it accurately reports the payments but you sold personal belongings at a loss, the IRS provides methods for reporting the amount without treating it as taxable profit.
Using TurboTax? You can report the profit under Wages and Income / 1099-MISC and enter each gain separately. You can also save up to 20% on TurboTax here.
What if you no longer have the original receipts?
Most people don’t keep a decade-old receipt for a desk, gas grill, or dining room chairs. Unfortunately, proving what you paid can become important when a payment platform reports the sale.
Start with whatever evidence is reasonably available:
- Email receipts
- Store-account purchase histories
- Credit-card or bank statements
- Photographs showing when you owned the item
- Product listings showing the original retail price
- Warranty registrations
- Marketplace messages and payment records
Tip: A screenshot of the Facebook Marketplace listing is also helpful. Save the item description, sale price, date, buyer conversation, and payment confirmation.
You do not need to turn every spring-cleaning project into a forensic accounting investigation. Still, keeping a simple spreadsheet can prevent confusion if you frequently sell items online.
Record the item, approximate purchase date, original cost, selling price, selling fees, payment method, and whether it was a personal belonging or inventory purchased for resale.
When does Facebook Marketplace selling become a business?
Selling your old sofa, stroller, and stack of college textbooks on Facebook Marketplace or a garage sale is generally different from regularly buying products with the intention of reselling them for profit.
Signs that you may be operating a business include:
- Buying items specifically to resell
- Maintaining inventory
- Selling regularly and continuously
- Advertising or building a seller profile
- Keeping organized business records
- Depending on the activity for income
- Consistently trying to produce a profit
For example, someone who sells five unwanted household items is probably just decluttering. Someone who visits estate sales every weekend, buys undervalued furniture, restores it, and lists it online at a markup may be conducting a resale business.
Business income is taxable even when no tax form is issued and even when customers pay in cash. The IRS states that gig and side-business income must generally be reported regardless of whether it appears on Form 1099-K or another information return.
A business may also be able to deduct legitimate expenses, such as inventory costs, selling fees, shipping supplies, mileage, advertising, and other ordinary and necessary costs. That is different from a casual seller trying to deduct the loss on an old household item.
Be especially careful with collectibles
Most household items lose value, but not everything sitting in your attic is worthless.
Collectible toys, trading cards, coins, artwork, vintage clothing, rare watches, records, sports memorabilia, and limited-edition sneakers can sometimes sell for considerably more than their original cost.
If you bought a baseball card for $50 and sold it years later for $1,000, the $950 gain may be taxable. The fact that you originally purchased it for personal enjoyment does not make the profit disappear.
The same principle applies to concert tickets and other personal property. The IRS has explained that gains and losses must be considered separately; a loss on one personal item generally cannot be used to erase a taxable gain on another.
In other words, selling a sofa at a $1,000 loss does not necessarily cancel a $1,000 profit from selling a rare collectible.
The bottom line for Garage Sale & Facebook Taxes
You probably do not need to panic because someone sent you $300 through Venmo for an old bedroom set.
For most casual sellers, garage-sale and Facebook Marketplace transactions involve used personal belongings sold for considerably less than their original cost. Those sales generally do not create taxable profits.
The key word, though, is profit.
When you sell something for more than your cost basis, the gain may be taxable. When you sell it for less, the personal loss usually is not deductible. And when an app or marketplace reports the payment on Form 1099-K, that form does not automatically mean the full amount is taxable. However, it does mean you should reconcile it carefully with your records.
So go ahead and clear out the garage. Just consider taking a few screenshots before the buyer drives away with your old patio furniture. Oh, and please be smart about buying or selling on Facebook Marketplace. Like every other platform, there are definitely some scams out there!
You generally owe federal tax only when you sell an item for more than your cost basis. Most yard or garage sale items are sold at a loss, so the proceeds usually are not taxable.
Facebook Marketplace profits can be taxable if you sell an item for more than you paid. Selling a used personal item at a loss generally does not create taxable income.
A Venmo payment is not automatically taxable. The tax result depends on whether you earned income or sold the item for a profit, not on the payment method.
Usually not if you sell the furniture for less than its original cost. A personal loss is not taxable, but it generally cannot be deducted.
No. Losses from selling personal-use property generally are not deductible, even though any gain from selling an item above its cost may be taxable.
Selling may be considered a business when you regularly buy inventory for resale, advertise, maintain records, and operate with the intention of earning a profit.
No. Taxable profit from larger garage sale or Facebook Marketplace sales must generally be reported whether the buyer pays through cash, check, Venmo, PayPal, or another method.