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Tax Credit question

Discussion in 'Model S' started by Jrogville, Feb 10, 2017.

  1. Jrogville

    Jrogville Member

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    In order to qualify to take the tax credit, do you have to still own the car at the end of the tax year? Also, is there a requirement for how long you must own the car? Thinking about buying a Model 3 and transferring it to my daughter. I'm early enough in the reservations (March 31 prior to the event) that I think the credit may still be available.
     
  2. SageBrush

    SageBrush Active Member

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    Will you have to pay sales tax twice ?
     
  3. Cricket88

    Cricket88 Member

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    Not if he "gifts" it
     
  4. Cricket88

    Cricket88 Member

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    To answer the OP, as long as you're the first registered owner on record, you can sell/transfer anytime afterwards and still qualify for it since you purchased it that tax year
     
  5. SageBrush

    SageBrush Active Member

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    I thought gifts were limited to $10k a year
     
  6. gearchruncher

    gearchruncher Member

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    The following requirements must be met to qualify for the credit.
    • You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit.
    • You placed the vehicle in service during your tax year.
    • The vehicle is manufactured primarily for use on public streets, roads, and highways.
    • The original use of the vehicle began with you.
    • You acquired the vehicle for use or to lease to others, and not for resale.
    • You use the vehicle primarily in the United States
    So, careful. If you acquired the car knowing you would give it to someone else, it appears you are ineligible.
     
  7. gearchruncher

    gearchruncher Member

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    One individual may give another individual $14,000 per year in the USA with zero consequences.

    If you want to give more than that to one person in a year, you are subject to a lifetime limit of $5.45M. After that, some taxes come into play.

    These taxes are what some politicians like to call "Death Taxes". Seriously. They only come into play if you give away more than $5M in your life ($10.9M if you're married). All that fuss over "having to pay the government when you die" only applies to people that die with more than $5M in the bank.

    However, in general, the USA does not limit gifts between people in any way, and the receiver is not subject to tax.
     
    • Informative x 1
  8. HankLloydRight

    HankLloydRight Fluxing

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    Some states allow you to "sell" the car to an immediate family member sales tax-free or for $1.
     
  9. Jrogville

    Jrogville Member

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    I thought about that and looked on my state's DMV site. Couldn't find anything about it in exemptions. Florida treasures their sales taxes a lot. But I'll ask a person, just in case.
     
  10. Jashev

    Jashev Supporting Member

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    I have transferred numerous cars to family members without any sales tax implications. Sales taxes are determined by the states, the $10k limit you are referring to is cash transfers for federal tax purposes.
     
  11. gearchruncher

    gearchruncher Member

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    #11 gearchruncher, Feb 11, 2017
    Last edited: Feb 11, 2017
    $10K in cash is a Federal reporting law in order to discourage money laundering and the use of drug money. Nothing to do with tax. All businesses must report all cash transactions above $10K, and it's illegal to break up transactions to avoid this. You have to do this even to deposit $10K cash in your own bank account.

    $14K is the limit of a gift of property where it has no federal tax effects. Above this, it eats into your $5M lifetime exemption, and only after you give $5M does tax come into play.
     
  12. drklain

    drklain Member

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    +1.

    I don't think Florida imposes a sales tax on private auto sales anyway. Virginia doesn't either. I think the sales tax on a private transaction is a California thing....but then again, a LOT of taxes are just California things....
     
  13. HankLloydRight

    HankLloydRight Fluxing

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    Oh, I think it's the other way around. Most states levy a sales tax on all auto sales, private and dealer. Including VA. It's a huge source of tax revenue for the states.

    Virginia: Virginia Department of Motor Vehicles
     
  14. drklain

    drklain Member

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    Thanks for the correction. I don't remember paying it when I made a private purchase years ago, but that may just be rose-colored glasses....or the purchase price was so low that it just wasn't noticeable.
     
  15. Jashev

    Jashev Supporting Member

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    I'm just showing my age. It used to be $10k ;-)
     
  16. Jashev

    Jashev Supporting Member

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    I know that it varies from state to state, however I have transferred vehicles to family members in NY, NJ and PA and there was never a sales tax issue. In fact, just transferred a $25k car to my daughter a few months ago.
     
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  17. Jrogville

    Jrogville Member

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    They do. They collect it form the buyer when you go to the tag office to transfer the title. Like I said, Florida loves those sales taxes (only fair, I guess, we don't pay any state income tax).
     
  18. Jashev

    Jashev Supporting Member

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    Don't you have an asset tax in Florida?
     
  19. Jrogville

    Jrogville Member

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    Almost all of it was repealed in 2007. The only part they kept was a one-time tax on real estate transactions and an annual tax on the value of leases of government property by non-government entities. But I don't even play an accountant on TV.
     
  20. alloverx

    alloverx Member

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    FYI, Yes in WA (also no income tax) you can transfer/gift to a family member and not pay sales tax. I have done this twice with the same car. This was a 8 year old car when first done.
     

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