Consignment shops work by selling items you still own on your behalf and paying you a share of the price when they sell. You drop off clothing, furniture, jewelry, or other goods; the shop prices, displays, and sells them under a written agreement; and you receive the sale price minus the shop’s commission and any fees. Ownership of the item stays with you until a buyer takes it home, which is the feature that separates consignment from a resale or pawn shop that buys your goods outright.
Who Owns the Item While It Sits in the Shop
You do. The shop takes physical possession but never takes title. If your vintage lamp sits on the floor for two months without a buyer, it is still your vintage lamp. That legal position matters because the shop is acting as your agent for the sale, which carries a duty to handle your property responsibly, keep accurate records, and pay you honestly when something sells. How strong that duty is in practice depends almost entirely on the contract you sign at intake.
What the Consignment Agreement Controls
The agreement is a binding contract, and most of the financial outcomes you care about are locked in the moment you sign. Shops present these as standard forms and many consignors sign without reading, but the terms are potentially negotiable. Four clauses do most of the work.
The Commission Split
Most shops take between 40% and 60% of the final selling price and pay you the rest. Higher-end boutiques often take a larger cut because their clientele expects a curated experience and the shop invests more in presentation. Some agreements let the shop set the price, some let you set it, and some require you to agree together. If the shop has full pricing authority, it can list your item lower than you expected, so know which model you are signing up for.
Contract Length and Automatic Markdowns
Selling windows commonly run 60 to 90 days. Many contracts include an automatic markdown schedule inside that window: a typical pattern is a 20% price drop after 30 days and a steeper cut after 60. Markdowns exist to move inventory, and they reduce your payout directly. For a higher-value piece, ask whether you can opt out of automatic reductions or set a floor price the shop cannot sell below.
Liability for Loss or Damage
This is the clause most consignors skip and the one that causes the most trouble. If your item is stolen, knocked off a shelf, or damaged by a leak, who absorbs the loss? Some shops carry a consigned-goods policy that covers property they don’t own. Others rely on a general business policy that excludes it, and some agreements disclaim liability outright. If the contract doesn’t mention insurance or explicitly disclaims responsibility, assume you are unprotected. Ask directly, and for high-value items ask to see proof of coverage.
What Happens to Unsold Items
The contract should spell out exactly what happens when the selling window closes and your item hasn’t sold. Most give you a pickup window of 7 to 14 days after the term expires. Miss that window and the abandonment clause typically transfers ownership to the shop, which can then clearance-price, donate, or discard the item with no further claim by you. Read how the shop is required to notify you. Email or text is standard; if the contract only requires mailed notice to whatever address is on file, you can lose property without knowing the deadline passed.
The Drop-Off
Most shops require an appointment or a designated intake window. Staff inspect each item for condition, brand, seasonal relevance, and fit with the shop’s customer base. A winter coat brought in during July will likely be declined or held until fall. Items that pass inspection get logged into the shop’s point-of-sale system with an identifier that links the physical piece to your account and the agreed price.
You’ll need a government-issued photo ID and current contact information to open an account. Intake forms usually ask for the brand, condition, and any known defects. Be upfront about flaws; disclosing them at the counter protects you from disputes later. Once processed, the shop handles display, customer questions, and sales tax collection until the item sells or the contract expires.
How and When You Get Paid
When something sells, the shop deducts its commission and any applicable fees, then pays you the remainder. Payouts usually run on a monthly cycle rather than after each sale. A common arrangement is payment on the 15th of the month following the sale, by mailed check, direct deposit, or an electronic transfer platform.
Many shops offer store credit as an alternative and add 10% to 15% to your share if you take it. Good deal if you shop there anyway, bad deal if the whole point was turning old belongings into cash. Watch for administrative charges too: a small per-item processing fee or an annual membership fee is common and usually modest, but they add up when you’re consigning a large number of low-value items.
A reputable shop will give you an itemized payout statement showing every item sold, the sale price, the commission taken, and any fees subtracted. If a shop cannot or will not produce that level of detail, treat it as a warning sign. You are entitled to an accounting of what happened with your property and your money.
If Your Item Doesn’t Sell
When the contract period ends without a buyer, you should get a notification by email or text that it’s time to collect your property. The retrieval window is short. If you miss it, the abandonment clause hands the item to the shop, and from that point the business can mark it down to clearance, donate it, or throw it away.
One consequence worth noting: if the shop donates your unclaimed items to a charity, you generally cannot claim the donation on your taxes. Ownership transferred to the shop before the donation happened, so the shop, not you, made the contribution. If you want the deduction, pick up the items before the deadline and donate them yourself.
Risk to Your Property on the Sales Floor
Once your things leave your home they are exposed to theft, accidental damage, fire, and water damage. The insurance question above is the first line of defense; the second is whether the shop itself stays solvent.
Under Article 9 of the Uniform Commercial Code, a consignment that meets certain criteria is treated like a secured transaction. If the shop’s creditors hold a security interest in its inventory and the business goes bankrupt, those creditors may be able to reach your consigned goods along with everything else on the floor. Commercial consignors protect themselves by filing a UCC-1 financing statement to record their ownership publicly. Individual consignors almost never do this, and for ordinary household items it isn’t practical. For high-value consignments worth thousands of dollars, the risk is real, and the most useful protection for most people is choosing a financially stable shop with a long track record.
Do You Owe Tax on What You Earn
Consignment income is taxable in principle, but most casual consignors don’t actually owe anything. Personal items like clothing, furniture, and electronics are capital assets. Sell one for more than you paid and the profit is a taxable capital gain; sell one for less and the loss is not deductible.1Internal Revenue Service. Publication 544, Sales and Other Dispositions of Assets Because most used clothing and household goods sell for less than their original price, most consignors have losses and owe nothing. The exception is collectibles, vintage pieces, and designer goods that have appreciated.
To figure gain or loss, start with what you originally paid for the item, including sales tax and shipping.2Internal Revenue Service. Basis of Assets Compare that to what you actually received after the shop’s commission. A $200 handbag that pays out $150 is a $50 loss, not reportable. The same bag paying out $400 as a limited edition is a $200 gain that goes on your return.
If the shop pays you through a third-party payment network or payment card, you may receive a Form 1099-K. Under current law, that form is only required when your gross payments exceed $20,000 and you have more than 200 transactions in a calendar year.3Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill Most individual consignors won’t hit that. Whether or not you get the form, any actual gain is still taxable; the 1099-K is an information document, not the source of the obligation.4Internal Revenue Service. Form 1099-K FAQs: General Information Hold on to receipts for the original purchases so you can prove cost basis if the IRS ever asks.
What Shops Cannot Accept
Federal law prohibits selling any product subject to a Consumer Product Safety Commission recall, and the prohibition applies to consignment shops and individual resellers, not just manufacturers.5U.S. Consumer Product Safety Commission. Resellers Guide to Selling Safer Products Simply having a recalled item in inventory is a violation. Most reputable shops check the CPSC recall database at intake; you should check anything questionable before you bring it in.
Children’s products get extra scrutiny because federal law restricts lead and phthalate content in items intended for children under 12.6Office of the Law Revision Counsel. 15 US Code 1278a – Childrens Products Containing Lead; Lead Paint Rule Expect shops to decline older painted furniture, vintage toys, and some children’s jewelry, or to ask you to sign a disclosure about the item’s history.