Model X regret (taxes)?

[nycgags]

From what I understand both Model S and X are eligible for the $7500 tax credit. One advantage the Model X has is that the full cost amount can be deducted in the first year on your tax return since it weighs over 6,000 pounds whereas only 30% of the Model S can be deducted. Do I have that right? Can the other 70% be amortized (?) deducted over future years? If that is the case then I am fine with that. If anyone familiar with the tax codes / tax laws that could chime in that would be great.

Also would it be possible or a huge mistake to try to trade-in my Model S for a Model X (only 1 month old and 300 miles)?

 

[brkaus]

This is really a conversation you should have with your accountant / tax person. Lots of considerations.

Yes, you will loose big trading in a 1 month old 300 mile car. Steepest depreciation is in the first 100 ft of driving a new car.

 

[trm2]

You are talking about Section 179 depreciation for a business, right?

 

[nycgags]

You are talking about Section 179 depreciation for a business, right?

I believe so, yes.

 

[nycgags]

This is really a conversation you should have with your accountant / tax person. Lots of considerations.

Yes, you will loose big trading in a 1 month old 300 mile car. Steepest depreciation is in the first 100 ft of driving a new car.

So the $1 per mile and $1k / month is not true?

 

[Krash]

So the $1 per mile and $1k / month is not true?

You lose $7500 immediately, since that tax credit is used up, whether you take it or not.

The depreciation is certainly not linear. Lots per mile and month up front. Very little at the end.

 

[nycgags]

You lose $7500 immediately, since that tax credit is used up, whether you take it or not.

Explain. If I buy a Model S and a Model X, I would be eligible for two $7500 tax credits.

 

[Krash]

Explain. If I buy a Model S and a Model X, I would be eligible for two $7500 tax credits.

Yes but to a new buyer that choses between a 100mi car and a brand new one, if they are eligible for the new tax credit, your car is $7500 more expensive after tax, so the price of the 100mi car has to adjust accordingly.

If you are eligible for $15000 in tax credits you might be sell the 100mi car to a third party who is not tax credit eligible (like a retiree) for less than the $7500 loss but as you wont be trading in the car you pay full sales tax on two new cars.

 

[trm2]

Explain. If I buy a Model S and a Model X, I would be eligible for two $7500 tax credits.

It would be the maximum of $15,000 OR your tax liability, whichever is less. This really is a question for your tax guy though, so talk to whoever does your business taxes.

 

[GatorGuy]

So the $1 per mile and $1k / month is not true?

You probably lost $10k just taking delivery of the car.

 

[brkaus]

So the $1 per mile and $1k / month is not true?

Tesla can sell their inventory cars at whatever price they like.

Leaving out the $7500 tax credit...

If you post a $80k car for sale $78,700... Not many people are going to pick that over a new car that they get to select all the options.

Also, a new car buyer typically pays sales tax. Amount determined by your jurisdiction. So that money is lost. The person purchasing the used car would also typically pay sales tax.

 

[nycgags]

Yes but to a new buyer that choses between a 100mi car and a brand new one, if they are eligible for the new tax credit, your car is $7500 more expensive after tax, so the price of the 100mi car has to adjust accordingly.

If you are eligible for $15000 in tax credits you might be sell the 100mi car to a third party who is not tax credit eligible (like a retiree) for less than the $7500 loss but as you wont be trading in the car you pay full sales tax on two new cars.

Trade-In does not mean sell to 3rd party.

Trade-In means sell back to the Tesla dealership, so not sure why you are bringing up CPO/3rd party deals.

 

[GatorGuy]

Trade-In does not mean sell to 3rd party.

Trade-In means sell back to the Tesla dealership, so not sure why you are bringing up CPO/3rd party deals.

If you trade it in, you'll lose even more money than selling it to a 3rd person yourself.

 

[nycgags]

So far nobody has responded to my question about Model S depreciation over multiple years.

 

[nycgags]

If you trade it in, you'll lose even more money than selling it to a 3rd person yourself.

A lot of "probably"'s in your responses, are you speaking from experience or wildly guessing?

 

[brkaus]

Trade-In does not mean sell to 3rd party.

Trade-In means sell back to the Tesla dealership, so not sure why you are bringing up CPO/3rd party deals.

Because when you trade it back in, Tesla has to sell it as a CPO.

So far nobody has responded to my question about Model S depreciation over multiple years.

You haven't been clear. But yes, in *most cases* a business can depreciate an asset over several years. The heavier vehicle falls in a special category that allows accelerated depreciation. As with most tax advice, your best to discuss with someone that is familiar with your particular situation.

 

[trm2]

So far nobody has responded to my question about Model S depreciation over multiple years.

The Model S is treated just like any other business asset. What did your tax professional say when you asked them?

 

[bhzmark]

So far nobody has responded to my question about Model S depreciation over multiple years.

It's not depreciated because your business sold/traded it, but biz should be able to take a loss deduction on the difference between price bought and sold .

 

[Krash]

Trade-In does not mean sell to 3rd party.

Trade-In means sell back to the Tesla dealership, so not sure why you are bringing up CPO/3rd party deals.

I am clear on what trade in means. If you trade the car you will likely lose more car value, but you don't pay the full sales tax on the second purchase. You only pay sales tax on the difference between your trade in value and the second car purchase price. If you sell to a third party you pay the sales tax twice, in states that charge sales tax.

 

[brkaus]

I am clear on what trade in means. If you trade the car you will likely lose more car value, but you don't pay the full sales tax on the second purchase. You only pay sales tax on the difference between your trade in value and the second car purchase price. If you sell to a third party you pay the sales tax twice, in states that charge sales tax.

Good point. Nevada does reduce the new car registration tax by the trade in value. So the tax hit isn’t as bad as I was thinking if traded in. Still, Tesla would have to sell as a CPO.