Last updated: October 2026
For most people in Melbourne, selling your own car does not create any tax to pay. Private cars are exempt from capital gains tax, and private sellers do not charge GST. Things only change when the car was used in a business or when you buy and sell cars as a business. This guide explains the common situations in plain terms. It is general information, not tax advice, so speak to your accountant about your own case.
Capital Gains Tax Does Not Apply to Cars
Under Australian tax rules, cars, motorcycles and similar vehicles are exempt from capital gains tax. That means:
- If you sell for more than you paid, there is no capital gains tax on the profit.
- If you sell at a loss, which is the usual case, you cannot claim the loss either.
This applies to everyday cars bought and sold privately, including classic cars that have gone up in value, as long as you are not carrying on a business of trading cars.
No GST for Private Sellers
If you are selling a car you owned privately, there is no GST on the sale. GST only becomes relevant when a business that is registered for GST sells a car it used in that business.
When the Car Was Used for Business
Business use can change the picture in two ways:
- GST. If your business is registered for GST and the car was a business asset, the sale may need to include GST on the business share.
- Depreciation. If you claimed depreciation on the car, selling it for more than its depreciated value can mean part of the sale price counts as income. Selling for less can create a deduction.
Sole traders who used a personal car partly for work are a common grey area. Keep your logbook and purchase records, and let your accountant work out the business share.
If You Buy and Sell Cars Regularly
Someone who buys cars to resell for profit may be treated as carrying on a business, and the profits become income. In Victoria, trading cars as a business also requires a motor car trader licence. Our guide to LMCT licensing explains how that works.
Records Worth Keeping
- The purchase receipt or contract when you bought the car.
- The sale receipt showing the date, price and buyer.
- For business cars: the logbook, depreciation schedule and GST records.
When you sell to us, you get a written receipt and the transfer paperwork is completed on the spot, so your records are sorted from day one. We pay by cash, bank transfer or cheque. See our sell my car page for a free price, or read the safest way to get paid before any sale.
Selling a private car through our cash for cars Melbourne service does not change any of this.
Frequently Asked Questions
Do I have to pay capital gains tax when I sell my car?
No. Cars are exempt from capital gains tax in Australia, so there is no tax on a gain and no deduction for a loss on a private car.
Is there GST when I sell a car privately?
No. GST only applies when a business registered for GST sells a car it used in that business.
What if my car was used for my business?
GST and depreciation rules may apply to the business share of the sale. Keep your logbook and records and check with your accountant.
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About the author: Written by Steve, owner of Victorian Car Buyers, a licensed motor car trader (LMCT 12395) based in Delahey, Melbourne.