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Federal Tax Credit HELP!

ItsNotAboutTheMoney

Well-Known Member
Jul 12, 2012
11,199
9,082
Maine
Hey everyone,

I have a question, given in a particular circumstance, and hopefully you guys can give me some insight or your opinions.

I’m going to place an order for a model 3, under my account because I’m going to be driving it 99% of the time. I’m gonna put down $22.5K and the rest is going to be loaned. As you guys may have heard, there’s the regular secure auto loan, and then there’s the unsecured auto loan. I’ve read into both and the unsecured auto loan seems like the better option just to have fewer complications. In either case, my credit is not good enough to get approved for a loan with a very nice APR, so my uncle has agreed to stand for the loan for me.

Given that I’ve listed out the “conditions” I want to know how the federal tax credit will work given that it’s very important to the purchasing of this vehicle. The concerns I have deal with how my uncle can receive the full tax credit in these scenarios:

1) My uncle gets approved for the UNsecured loan, receives the money in his account and writes a check to Tesla for the whole price of the car during delivery day. Should we then have the car registered/titled under his name or mine?

OR

2) My uncle gets approved for the regular secured loan in which the lender’s name will be on the title, and the car won’t be “owned” until the loan is paid off. Should we have the car registered in his name or mine?

Moreso, if you all have other scenarios that I haven’t thought of that may be crucial or beneficial to my situation, I’d appreciate it! Thanks!

TL; DR: the most important point is the method to which we can secure the full $7500 credit. I’m I’m almost 100% that my uncle makes enough to be liable for more than $7500 annually.

When you finance a vehicle you _are_ the title holder. For a secured loan the lender is a lienholder (they have a financial interest in it). The primariy lienholder holds the title for security, since they need to have the title to sell if they repo the vehicle. But they do not strictly have title to the vehicle. (It's different with a lease, where the lessor owns the vehicle).

For an unsecured loan you are the owner and the lender doesn't have a lien. You simply owe them money.

You operate the vehicle so you would normally be, but not necessarily have to be a registrant.

IRS said:
The vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States.

In order to claim the tax credit the individual must be a name on the first title. That's really it.

So if you want your uncle to claim the credit, you need him to be on the title. You can either be multiple owners (which means all parties must agree before the vehicle could be sold on) or have join ownership on the title (which gives any owner the right to sell).
How you'd handle that is up to you: either take it on trust, or have an additional contract that says how ownership share falls depending on what happens if you do/don't pay off the loan.
 

hotony13

Member
Aug 20, 2018
84
10
San Jose
Either case, you’d recommend the unsecured loan route for the fewer amount of paperwork and you’d actually have the title of the car in hand, correct?

Also, I spoke with a CVRP representative and talked about my situation in which, technically I’m still a dependent tax wise, and that the only thing I’d need to show to them is that I’m some sort of co-buyer on the title, and I can apply for the rebate! @johnster007 @ItsNotAboutTheMoney
 

Raechris

Member
Nov 21, 2017
656
323
Boston
NeverFollow has a point and you may want to wait for M3 lease program. The devil is in the details with this question and the IRS has 3 years to audit uncle from filing date of 18 return. Looks at treasury regs too since not much detail and IRS could take odd position in future. I would not advise uncle to play with this fire stick (sorry). The CA rebate is completely separate and not connected to IRS. Same CA group administers MA rebate and when I filed my third app, they started asking if I had the first car as program requires 36 mo hold (I do).
 

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