DAN.com

Do you pay taxes for your domain sales?

Located in General Domain Discussion, started by atinc, Oct 14, 2018

Replies:
22
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3,092

?

Do you pay taxes for your domain sales?

  1. Yes always

    31 votes
    55.4%
  2. No never

    17 votes
    30.4%
  3. Sometimes

    8 votes
    14.3%
Total: 56 vote(s)
  1. atinc

    atinc Entrepreneur VIP

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    When you have an inbound sale, do you pay tax for it?

    I don't expect you to comment particularly about your case..

    but I am asking you to participate the poll where the results comes anonymously.

    Are there any discouraging penalties about this in your country?

    Let's see the results..
     
    Last edited: Oct 14, 2018
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  2. Kate

    Kate Domainosaurus Rex VIP ★★★★★★★★★★

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    Being incorporated, yes.
     
  3. D Haynes

    D Haynes Top Contributor VIP

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    I would guess a lot of people don't.
     
  4. atinc

    atinc Entrepreneur VIP

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    Interesting results. Keep them coming.
     
  5. Nattydomain

    Nattydomain Reuse Domains VIP ★★★★★★★★★★

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    You will report it if the big houses do like Sedo, Afternic etc. Only once I got a W9 from afternic but never since and not even Godaddy which I thought was odd.
     
  6. MapleDots

    MapleDots Top Contributor VIP

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    Good anser Kate but...

    Being not incorporated - also yes

    I also charge sales tax if the sale occured in my home country of Canada.

    Anyone that makes any serious money would be a moron not to claim expenses and taxes. The tax man WILL find you but that is the least of it.

    I make 100k and deduct 50k in expenses and now I only pay taxes on 50k.
    You have to pay taxes to claim expenses, if you don't claim expenses you are (insert strong language here).
     
  7. kam

    kam Top Member PRO VIP ★★★★★★★★★★

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    It depends on where you live. Not every country required you to pay tax for domain sales.

    let's use Hong Kong as an example:xf.grin:
    • Hong Kong follows a territorial principle of taxation. Individuals are taxed only on income that has been “earned in Hong Kong”.
    • There is no capital gains tax, no dividend tax and no inheritance tax in Hong Kong.
    I don't have to pay tax as long as the buyer is not from Hong Kong.:xf.cool::xf.laugh:
     
  8. Kate

    Kate Domainosaurus Rex VIP ★★★★★★★★★★

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    Also, depending on where you live, occasional sales may not be reportable. Like the infrequent sales you would make on Ebay.
    But if you make sales on a regular basis then it would be considered a professional (and taxable) activity.
    YMMV.

    When in doubt consult with a CPA.
     
  9. bmugford

    bmugford www.DataCube.com PRO VIP ICA Member ★★★★★★★★★★

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  10. D Haynes

    D Haynes Top Contributor VIP

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    Just out of interest....

    What expenses would you claim in relation to a domain sale? I assume you would only pay tax on the profit of a sale and not just the sales price but sales tax on the whole amount?

    I guess the tax man is only a really worry if your selling thousands of dollars of names a year. I'm sure many on this forum are not doing that.
     
  11. bmugford

    bmugford www.DataCube.com PRO VIP ICA Member ★★★★★★★★★★

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    It depends on how you are accounting.

    If you are doing it via capital gains you deduct the original cost at the time of sale. If you are doing ordinary income where you basically do total income - total expenses you might expense them at the time of purchase instead.

    Renewals are another ongoing business expense. You might also have expenses related to your office location, equipment, travel, etc. that are business related.

    I have a CPA handle it for me.

    Brad
     
  12. MapleDots

    MapleDots Top Contributor VIP

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    I purchase domain names for as high as 20k so that is an expense against all profit. (example: I paid 20k for red.ca) There are also the renewal fees, web hosting for the landers, ssl certificate, dedicated IP, google ads, outbound costs, office phone, heat, electricity, office help etc.

    I would be foolish not to run as a legitimate business because those costs come directly off my profit margin.
     
    Last edited: Oct 15, 2018
  13. D Haynes

    D Haynes Top Contributor VIP

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    Thanks for the replies.

    I see there are different tax implications depending on the business. So if your buying and selling domains you pay tax on the difference after all expenses where as if you buy a domain for your own business use you can write it all off as an expense. I think lol.
     
  14. MapleDots

    MapleDots Top Contributor VIP

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    You still have to report all profits and then remove expenses. You have to work within your local tax laws to see what applies in your country of origin. It's really no different than any other business.

    In Canada I pay sales tax on everything I buy but I can claim back all the tax amount that I paid on my business assets. So if I pay $13 tax on a $100 chair and that chair is used for business I get the $13 dollars back plus I can deduct the chair as an expense. If the expense is over $300 it is considered an asset and we have to depreciate it over 5 years whereas computer and related equipment gets depreciated over 3 years.

    There is a big difference in doing domaining as a hobby as opposed to a business. Each one has it's advantage except you usually don't get charged with tax fraud if you claim everything as specified. I think the vast amount of people in domaining today fly by the seat of their pants and figure they will never be caught. So now what if you do get a big sale, lets say 500k do you claim as income or not. Either way you have to declare to the taxman, they see 500k come into your account or you report it. If you report it they as what else you have done and pandora's box is opened.

    Do it right from the start and you will do yourself a huge favor in the long run.

    PS. IF you don't report your 500k sale then..... well if I have to tell you then it does not really matter and you are beyond reason. Bubba will explain it to you in the big house :whistle:
     
  15. JB Lions

    JB Lions Top Contributor VIP ★★★★★★★★★★

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    Yes.

    Just for the domaining part:
    Income - domain sales, parking revenue
    Expenses - buying domains (aftermarket, hand regs, wherever), renewals, any domain tools I use, advertising

    My other income is from affiliate marketing
    Income - all affiliate income
    Expenses - hosting, affiliate tools (stats, product tools etc.), graphic work, ppc/advertising

    Also this year, new computer, new chair = business expense. Sometimes I buy books for a site I'm working on = business expense

    With domains, sometimes I look over the year and with renewals you can decide when they are an expense. For my domains expiring in 2019, I can go ahead and renew this year to 2020, to drop my taxable income a little bit.

    Print it all out, give it to my accountant. 1 folder. Left side income, right side expenses with a cover sheet on top for both.
     
    Last edited: Oct 15, 2018
  16. D Haynes

    D Haynes Top Contributor VIP

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    Thanks again for your informative post. If I had a 500K sale I'd have to register as self employed to get a unique tax reference to be able to pay the tax which I believe would be 50 percent (or at least 40 percent) and I wouldn't be able to write any of it off as I'd have only just turned self employed. I can see why people wouldn't declare a sale like that for a couple hundred thousand but at the same time I'd imagine it would be hard to hide.
     
  17. indiegrind

    indiegrind Established Member

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    Yes, incorporated and all money relating to domain business goes in and out of one business account.
     
  18. gina ferrano

    gina ferrano Established Member

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    In the past, I had not. I am in the U.S, not incorporated. If I was I would write off everything (all my domain purchases even ones I don't sell), so instead, I do capital gains/loss plus expenses. (Brandbucket) So a year I make a bit more and I have a name that has depreciated I will sell it for a loss to help offset income.

    NOTE: one doesn't need to be 'self-employed' if you sell a name whether $500 or 500k, it would fall under capital gains unless you're incorporated then it would be different. I would consider incorporating if I consistently start making more money, for now, it's <6k.
     
    Last edited: Oct 19, 2018
  19. Domainstore

    Domainstore Top Contributor VIP ★★★★★★★★★★

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    Very interesting, I learned a lot here.
     
  20. Doron Vermaat

    Doron Vermaat Co-founder, Efty Efty Staff PRO VIP ICA Member

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    Hooray for Hong Kong!

    Shame the average house price is US$1.28m :greedy:
     
  21. kam

    kam Top Member PRO VIP ★★★★★★★★★★

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    Many Hong Kong residents spent around US$1m to purchase a small flat in an apartment only.:xf.cool: Not a big house :xf.frown:
     
    Last edited: Oct 20, 2018
  22. topdom

    topdom Top Contributor VIP

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    What if you don't make profit?
    Or do you get tax return because of renewals?
     
  23. topdom

    topdom Top Contributor VIP

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    If prices are so high in HongKong, why is .hk not doing well?
     

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