Federal Credit on Model 3

[RKatarey]

My cousin owns a Model S. Using his log in I made a reservation for the Model 3. I used my own credit card to make the deposit of $1000.00.
My cousin was told that the car will be ready for delivery in Nov.2017.
My question is. Will I get title on the car from Tesla. I am planing to keep the car for my own use, so, will I be eligible for the federal tax credit? Will I end up paying double sales tax in California?
Thanks in advance for your info.

 

[Twiglett]

sounds like you just bought your cousin a nice reservation for a Model 3

 

[JHCIV]

The reservations are non-transferable and title will go to your cousin. You should probably just reserve yourself.

 

[PRSIST]

Your cousin is obviously aware of everything you have done and is ok with it. So give him the money to buy the car and then after all the registration is done, you guys can get the title transferred into your name. All the while, you could be driving a Model 3.

 

[tracksyde]

I'm sure I read it here on TMC, but a few people have mentioned that the reservation holder is the one who needs to purchase the car (your cousin), but the car can be titled to anyone you wish. If this is the case, then (1) no, you will not get the tax credit since you did not purchase the car, your cousin did.. so he gets the tax credit and (2) no, you will not have to pay sales tax twice since it was only sold once (by Tesla to your cousin).

I did find this though:

I ordered two MS's last year under my name. The first was REGISTERED in my wife’s name and the second in my name. When you complete the order you can put whomever's name and address you want on the title. They both show up under my "MyTesla" account, however.

source: Reservations aren't transferable, but can the car be bought in someone else's name? | Tesla (at the very bottom of the thread)

 

[RKatarey]

I'm sure I read it here on TMC, but a few people have mentioned that the reservation holder is the one who needs to purchase the car (your cousin), but the car can be titled to anyone you wish. If this is the case, then (1) no, you will not get the tax credit since you did not purchase the car, your cousin did.. so he gets the tax credit and (2) no, you will not have to pay sales tax twice since it was only sold once (by Tesla to your cousin).

I did find this though:


source: Reservations aren't transferable, but can the car be bought in someone else's name? | Tesla (at the very bottom of the thread)

Thank you for your response. If I am able to get the title in my name. I can get the federal tax credit, I think.

 

[eSpiritIV]

Everyone seems on point here. Your Cousin will have to buy/get loan on vehicle and he will get tax credit. You may try to put yourself on the loan paperwork as a secondary on the title and loan.

Sadly your cousin is in for more than he bargained for if you have to make the car payments and he is stuck on the loan till he gets the Tax credit in 2018, and then can pay down the loan for you. If you take delivery in January then you will have to wait till 2019 to get your tax credit back from him. Cavet is that he has enough taxible income to get the full $7500 tax credit

At that point, you can refinance the car and transfer the loan fully to your name.

 

[tracksyde]

Thank you for your response. If I am able to get the title in my name. I can get the federal tax credit, I think.

Hmm.. I'm not a CPA.. I dont claim to undertand the IRS.. I am not a lawyer.. but based on my quick read of the IRS document.. it seems you may be correct:

source: Internal Revenue Bulletin - November 30, 2009 - Notice 2009-89

Under "Meaning of Terms":

.07 Acquired. A vehicle is not “acquired” before the date on which title to that vehicle passes under state law.

And then this:

Section 3. SCOPE OF NOTICE
The new qualified plug-in electric drive motor vehicle credit determined under this notice applies to plug-in electric drive motor vehicles that—

(1) Are placed in service by the taxpayer in a taxable year beginning after December 31, 2009;

(2) Are acquired by the taxpayer after December 31, 2009; and

(3) Otherwise meet the requirements of § 30D.

So it doesnt actually say "purchased".. only "acquired".

 

[gambit48]

I actually e-mailed Tesla about this recently. About 2 minutes after I sent the e-mail, I got a call from a Tesla rep.

Basically, your cousin is the one Tesla is going to title the car to. They'll want him to pay for it too. He may have to just get the tax credit and give the money to you (I'm assuming he's got the income for it since he has a S). You can put yourself on as joint, and then later, just remove him (through refinancing, changing registration, etc). You may run into registration or tax issues because he's your cousin. For me, I tried to reserve for my parents and in my state, there's tax exclusions for a parent-child transfer.

 

[SageBrush]

Ask a CPA if sales tax will be collected twice.
If OP can be listed on the initial title perhaps not ...

Tricky question

 

[rnelsonee]

Hmm.. I'm not a CPA.. I dont claim to undertand the IRS.. I am not a lawyer.. but based on my quick read of the IRS document.. it seems you may be correct:

source: Internal Revenue Bulletin - November 30, 2009 - Notice 2009-89

Under "Meaning of Terms":


And then this:



So it doesnt actually say "purchased".. only "acquired".

True, and I also can't say for sure how the IRS would respond, but it also must be new (and not purchased for resale). Certainly the IRS won't allow one person to buy it, get the credit, and the him and 10 of his buddies transfer the title to each other, each one of them getting a credit. I think once Tesla titles the car to OP's cousin, the car can no longer be transferred as new.

 

[Twiglett]

Also. As your cousin is buying the car and getting the tax credit, he will likely lose the credit if he no longer owns the car come tax time.
Not sure what the timeframe is, but I'm pretty sure the tax folks don't allow you to get the credit then "flip" the car.

 

[Runt8]

There have been multiple posts on this - the general consensus is no one knows for sure, so you need to consult a tax professional. If I were in your situation I would ask the same CPA that you plan to use to file your taxes. That way they have a vested interest in answering accurately.

 

[jsrawa]

In my opinion you know that this isn't the way the reservation system is designed to work and that's why your asking this question. It's great that your cousin is a Tesla owner but that doesn't make you one and therefore I don't think you should be able to jump the rest of us in line.

 

[RKatarey]

I bought my own Model S. I was told by a Tesla rep that the company is seriously considering, allowing the title to be changed if the owner is related. They have too many inquiries about this.

 

[gambit48]

I bought my own Model S. I was told by a Tesla rep that the company is seriously considering, allowing the title to be changed if the owner is related. They have too many inquiries about this.

Did they just tell you this recently? I asked Tesla this in the beginning of August or so. I was told no. However, the reason I asked was because I was told specifically by the Tesla showroom employees that it was ok if it was an immediate family member. The rep I talked to in August said they were incorrect, but if my showroom was giving that info, I'm sure other showrooms were as well. I heard it elsewhere and just asked the reps at the showroom to confirm right when I was at the front to get assigned a computer to make the reservations.

 

[RKatarey]

Yes, 2 weeks ago when I called their CS line. The lady said that there were too many customers asking about it and the company is looking into it.

 

[gambit48]

Excellent! I wish I remember the details more of who spread that info way back then, but I really felt it was Tesla's fault because I remember the original rules allowing it came from their people. I just didn't have any written proof. It was a reasonable restriction back then, so I didn't expect to need to copy proof. And their employees ended up having a very similar restriction (could order for family).