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Advice Needed on Selling... Tax Credit

Discussion in 'Model 3' started by kgerrard, Aug 8, 2018.

  1. kgerrard

    kgerrard Member

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    Hi Guys! I am in need of some advice here.

    So I finally got my 3! And it's cool but I really miss my S and want to go back to the bigger car.

    Now I'm not sure exactly how the tax credit works... but being in Utah I haven't registered the car yet. The Tesla Temp Tags last 90 days. So should I try and sell the car now? And hopefully someone else can take the credit if THEY register it?

    Or will that not work... in which case I will register it and keep it for awhile, take the credit, then get the S.

    Any advice is appreciated.
     
  2. ℬête Noire

    ℬête Noire Active Member

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    As always, consult your/an account however in layman opinion; You already have the vehicle in operation, what the IRS is technically is concerned about (not the registration). It was bought without intention to resell. It's you, and only you, that'll be able to claim the tax credit. Put it your 2018 taxes, filling with it the necessary 8936 form. It'll factor into the resale price you'll be able to get and that's that.

    Good luck.
     
  3. kgerrard

    kgerrard Member

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    Oh really? You think without registration the tax credit could still be taken advantage of?
     
  4. gregincal

    gregincal Active Member

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    It has been registered. The "Tesla temp tags" are California registration tags. You can't drive a car before it's registered with some state, and the federal government isn't going to care which state the car was registered in.
     
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  5. Glamisduner

    Glamisduner Member

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    You best bet is probably to wait until the federal tax credit has been phased out. Otherwise your going to have to take a serious loss, because who is going to buy it from you for near full price, when they can buy their own and get a 10k tax credit?
     
  6. kgerrard

    kgerrard Member

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    The IRS considers a vehicle acquired when "Title has transferred to taxpayer under state law". I'm not sure if it applies before registration. I'll have to do some digging.
     
  7. gregincal

    gregincal Active Member

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    Title was indeed transferred to you under California state law. Again, the federal government doesn't care what state you're talking about.
     
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  8. HeloCaptain

    HeloCaptain Member

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    Buy the S and take two credits (if your tax situation permits that amount of credit).

    I purchased an S in early 17 and traded it in for an X in late 17. Received both tax credits = $15000. total.

    You don't have to keep the car for any specific time to claim the credit.

    Comments relate ONLY to federal tax credits.
     
  9. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Well-Known Member

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    #9 ItsNotAboutTheMoney, Aug 9, 2018
    Last edited: Aug 9, 2018
    26 U.S. Code § 30D - New qualified plug-in electric drive motor vehicles

    If you sold the vehicle to somebody, then for them it would be
    (A) No
    ... and so they wouldn't be able to claim.

    For you it's
    (A) Yes
    (B) ?
    (C) Yes
    (D) Yes
    (E) Yes
    (F) Yes

    As long as you satisfy (B) you can claim the tax credit when you file your 2018 taxes (unless the law changes).
    If you buy a new Model S, then you'd be OK _also_ to claim the tax credit for that, but note that the credit is non-refundable, so you'd need $15,000 of tax liability less other credit fully to claim for both vehicles.
     
  10. Msjulie

    Msjulie Member

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    I know this is the common belief, that selling a used Tesla (or any car) where you got the tax credit and new buyer can not and thus the car is worth less is 'truth', it is not what I have seen.

    Some buyers will expect you to price accordingly and they won't be your buyer necessarily. Have a look at cars.com, cargurus, carmax etc - the fact a car had a tax break for the original buyer is rarely (never?) reflected in the sale price - or to protect my backside from negative feedback :) - that I have observed.

    On that note, I recently sold my 3 to get a Performance 3 and though I never thought to ask some of the prices folks are asking for turnaround-model 3s, the price I got did not reflect the fact that I still got/get the tax credit for original purchase. In other words, I thought I got a completely fair price for my car and there was not tax-break penalty for me...
     
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  11. Raechris

    Raechris Member

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    +1 and car in service which happened when you drove it away
    Assume you purchased and did not lease, otherwise lease company gets the credit
     
  12. Msjulie

    Msjulie Member

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    Just to justify myself further :) Tesla doesn't reduce the price for you if the tax credit doesn't apply to you and I'd be bum-shocked if the price goes down incrementally next year as the credit phases out...

    I totally get it that if you qualify for the tax then the additional price of new vs pre-owned is a clear advantage to you as a buyer.. but it's not a given for valuation of a given car itself, just perhaps in a given transaction
     
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  13. rweggert

    rweggert Member

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    Take the tax credit yourself and then give the new buyer an additional discount of up to the $7,500. You might make yourself a small profit.
     
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  14. Glamisduner

    Glamisduner Member

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    It sure has affected volt resale value or other cars that are readily available. 3's are still hard to get so I think that helped you out, but production rampup has already happened now. You might find someone interested in buying a 50-80k car that does not have a 7.5k+ tax liability but it will certainly be a hard sell to most people when they can buy a new one for less.
     
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  15. Msjulie

    Msjulie Member

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    I didn't sell mine for more than I paid, it was discounted on miles and age but *not* because we are taxed enough to be able to take the credit and not every buyer is... the value of the car was the value of the car and I agree with supply/demand influence.

    For a buyer who won't qualify for rebate (we don't for Ca) then a lightly used one at a normal discount can be the better deal than a new one in the end.

    I guess the more I read about folks 'informing' others that their car is magically worth -$7500 on top of standard used car calculations, the more I think that is just ridiculous.

    Mind you I'm not talking strictly about supply/demand driven pricing, I'm talking about standard new car deprecation practices. Tax credits seem to have nothing to do with it and next January they will have even less ;)
     
  16. Glamisduner

    Glamisduner Member

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    So you would buy a used car with a $5000 discount over a new car that you can customize yourself with a $7500 tax credit. Maybe I'm not understanding what your saying but the math is pretty basic for most people?
     
  17. Msjulie

    Msjulie Member

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    If I qualify for the tax break and the math works, of course not -

    I guess I'm not explaining correctly - all I'm saying is that the value of the car is not implicitly -7500 because I claim the tax credit. It will certainly be impacted by other market forces including demand and availability, just like any other car or product someone can buy.

    Because I qualify for a lower/higher car loan rate than someone else, does that mean the car should be priced differently for me vs them? There's apples and oranges being compared here and it muddles the issue.

    Claiming that the car loses -7500 immediately on top of the other not-new-car deprecations 'just because' is, to me, wishful thinking on the part of some potential buyers or just plain inventive math..

    No one is forced to buy one used car over another.. mine was perfect though :)
     
  18. Glamisduner

    Glamisduner Member

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    It's a temporary depreciation which will start be be phased out next year :) Which is why I suggest holding onto it.
     
  19. Msjulie

    Msjulie Member

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    There is a very good point there (helping to prevent the artificial deprecation of your car based on tax credit) though of course you will have a car 1 year older but also not driving your preferred car for that much longer...
     
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  20. Glamisduner

    Glamisduner Member

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    Yep, from a financial perspective it seems likely better to keep it until tax credit is phased out (no guarantee that tesla won't reduce prices or that they won't fall for some other reason). Buying a new S will also be a 1 year old car a year from now, so you will take the one year old loss no matter what. Guess it depends how bad one want's the S and/or dislikes the 3
     

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