I would imagine that selling a domain would have to be reported as earnings when doing your taxes and you would be responsible for paying taxes on these earnings. However some thing arent this way. So my question: are domain sales taxed? Thanks in advance
no , well ppl sell domains for $2 , $10 , $100 wat would u really charge in tax to these, major sales are below $1000 in terms of volumes. though your point is intresting, for large domains it can be , i have myself taken domain worth xxxx but i dint get any tax notification in their billing . so at present theres no such taxes specifically for domain sales
You bet, they are. It's a standard income. Of course, for small sales (i.e $5 to $100), most people would probably admit to omitting the $$ from the tax return. It's true with regards to other occasional small income. How many people file a return for a $20 winning bet from a beer & pizza party during superbowl? If your livelihood depends on selling domains, and you're generating significant annual income (even if it consists of many small sales) or you sold a high value domain, hire an accountant and make sure to do this right. Do not go down the Richard Hatch path - you will get caught, and it won't be pretty. Having said this, there are legitimate strategies for optimizing taxes. One of the most overlooked for high value domains is incorporation. EXAMPLE: Say you own xyz.com which is worth $1M. If you sell it directly, you end up paying standard income tax, which at that level (and depending on the state) will be around 50%. Leftover = $500K If you incorporate xyz.com (XYZ, Inc), and then sell it as a corporation after 1 year, you only pay capital gains tax or 15%. Leftover = $850K So by incorporating, you just saved $350K in taxes. The reason this strategy does not work for cheap domains is that you end up paying more in state and registered agent fees (around $200/year), than netting from the sale. On the other hand, if your domain is worth $10K+, consider incorporating (to avoid double taxation, you can always do S-corp). I don't know that much about other countries. The incorporation strategy has another interesting benefit: CONTINUITY. Every time you transfer a domain, all SE stats and rankings go back to zero (at least that's the case for Google). By keeping the same registrant - the corporation - you avoid this loss, and increase the value of the domain. Disclaimer: I'm not an attorney or an accountant. Make sure to consult actual practitioners for advice. Hope this helps. P.S. If you want a bit more info on the incorporation issue and domains, read my post on .edu names.
agreed eduorg everything u said perfect, i just answered for domain sales tax not other taxes. its natural that taxes need to be paid above a certain income level.