Texas question - tax savings on trade-in value?

[turns2stone]

I've bought many cars in Texas, and the trade-in price is always 'exempt' from the normal vehicle sales tax rate (6.25%) when traded-in during the new vehicle purchase.

I accepted a trade-in offer via app from Tesla, for my existing M3P. They're showing I have positive equity of $17K (true) for a trade-in offer of $38K (fine).

I'll use Tesla financing and have already been approved. The problem is that the app Financing section shows neither the tax savings from the trade amount, and it also shows my positive equity as a 'negative' downpayment! It's looks like they want to cut me a check for my positive equity instead of applying it to my financed amount.

I can't see any way to adjust this in the app, and although I've reached out, I haven't been able to get anyone from Tesla to call me, yet. I love the simplicity of buying via iPhone, but when it doesn't quite work as expected, it's a bit frustrating.

 

[ATPMSD]

Most people find better financing at banks or credit unions where, they also have real people you can talk with. As to your M3P, assuming you have one of those leases where you cannot purchase the car, you are basically terminating the lease and if you are doing it early you have to make all remaining payments and well as pay any end of lease termination fees.

 

[turns2stone]

Most people find better financing at banks or credit unions where, they also have real people you can talk with. As to your M3P, assuming you have one of those leases where you cannot purchase the car, you are basically terminating the lease and if you are doing it early you have to make all remaining payments and well as pay any end of lease termination fees.

I shopped around quite a bit via both banks and credit unions and 5.34% for 60 months from Tesla was the best/equal to what I could get elsewhere.

No, my current car is not leased, it's traditional financed.

So this should be super straightforward, done this plenty of other times. I shouldn't have to pay the sales tax on any of the trade in value that Tesla has approved for me. Unless Tesla has some weird restrictions on this benefit, because they're not a traditional dealer?

 

[ATPMSD]

I shopped around quite a bit via both banks and credit unions and 5.34% for 60 months from Tesla was the best/equal to what I could get elsewhere.

No, my current car is not leased, it's traditional financed.

So this should be super straightforward, done this plenty of other times. I shouldn't have to pay the sales tax on any of the trade in value that Tesla has approved for me. Unless Tesla has some weird restrictions on this benefit, because they're not a traditional dealer?

I am not from Texas, but your conclusion makes sense. The only Tesla issue is they are not customer service oriented and are very difficult to work with, which is why many people avoid using Tesla finance.

But, here is an email address you can try: [email protected]

They seem to respond to this email address.

 

[turns2stone]

I am not from Texas, but your conclusion makes sense. The only Tesla issue is they are not customer service oriented and are very difficult to work with, which is why many people avoid using Tesla finance.

But, here is an email address you can try: [email protected]

They seem to respond to this email address.

Thanks, I'll give that email a try. I didn't have any issues when I bought my current Tesla via their financing (which was via Alliant, and this time via Wells Fargo), so I dunno if they got worse, or if the end-of-year madness is exacerbating things.

 

[turns2stone]

I talked to Tesla, and they said I do have to go to the tax office to pay the tax directly, and it will reflect the trade-in savings. So problem solved, I think!

 

[EVer Hopeful]

I accepted a trade-in offer via app from Tesla, for my existing M3P. They're showing I have positive equity of $17K (true) for a trade-in offer of $38K

So they're saying they'll give you 38k for your M3P, and you still owe 21k on it meaning when they "give" you the 38k they sent 21k of it to whomever you financed the M3P with and a check to you for 17k

Am I correct so far?

Then you're applying this M3P to the purchase of a new Y, so let's say that was 66k; take off the trade in value of 38k and you're going to pay tax on ... erm .. carry one ... change sides change signs ... arithmetic 28k !

and at 6.25% that's gong to be ... more arithmetic ... hang on ... $1,750

...theoretically

Is that roughly what's on the paperwork?

 

[turns2stone]

So they're saying they'll give you 38k for your M3P, and you still owe 21k on it meaning when they "give" you the 38k they sent 21k of it to whomever you financed the M3P with and a check to you for 17k

Am I correct so far?

Then you're applying this M3P to the purchase of a new Y, so let's say that was 66k; take off the trade in value of 38k and you're going to pay tax on ... erm .. carry one ... change sides change signs ... arithmetic 28k !

and at 6.25% that's gong to be ... more arithmetic ... hang on ... $1,750

...theoretically

Is that roughly what's on the paperwork?

Correct on all counts. EDIT: except my new car is (another) Model 3 Performance, not Y

The problem was that this math was not (is not) represented on the digital paperwork. And it was especially confusing because I forgot Tesla doesn't fool with your TX state tax, at all. But it was confirmed to me a few hours by a Tesla rep, with all the correct numbers. They did some wizardry on the back-end, and now the app correctly shows my upcoming amount to-be-financed with the trade-in reflected.

This was not the case when I made my original post.

 

[Irishtr]

Came here to see as we're in process of replacing our Model X with a new Model X. Originally when we purchased in 2019 all was included. So now had me sweating how the tax credit on trade in was gonna work out. I'm sure there will be some screw up. But at least I know sales price - trade in * 6.25 = amount I gotta shell out direct to Tax office to register... Ugh. Texas really needs to change their BS lobbyists laws for Dealerships (pipe dream I know)

 

[EVer Hopeful]

Texas really needs to change their BS lobbyists laws for Dealerships (pipe dream I know)

I mean they do, to be sure (as well as a long list of other things they need to change), but if anything this is dealership lobbying working in your favour.

If you had the choice to sell it for the same money to a third party through craigslist OR to a dealer, then there's no real difference between the two transactions to you, financially at least. But because the trade in at the dealership allows you to lower the value you're paying the 6.25% on, it's in your interest (and of course theirs) to select that option

Of course they'll low ball you on the value, but that's what you 'pay' instead of 'paying' your time to go the craigslist route



I still can't believe that Tesla moved their HQ to Texas and didn't force a lot of beneficial changes for direct manufacturer sales as a predicate

 

[turns2stone]

Came here to see as we're in process of replacing our Model X with a new Model X. Originally when we purchased in 2019 all was included. So now had me sweating how the tax credit on trade in was gonna work out. I'm sure there will be some screw up. But at least I know sales price - trade in * 6.25 = amount I gotta shell out direct to Tax office to register... Ugh. Texas really needs to change their BS lobbyists laws for Dealerships (pipe dream I know)

yeah get ready to take a big check to the Tax office and wait around for a couple of hours to pay/get your plates.

 

[EVer Hopeful]

...then go home for a loooong hot shower

 

[xrayphoton1]

I'm also in Texas and need some help with this too! I don't want to accept the financing terms unless I know the trade in credit will be applied. When I click "view terms" I get this page below but if I accept terms it says no changes can be made later. I don't want to click accept until I know the Texas trade in credit will be applied. Is this the screen where they eventually applied it for you after speaking to someone? I sent a txt to the Tesla rep that's been messaging me about it with no response yet. Did you have to call Tesla or email the address mentioned earlier in the thread to get help? Thank you so much

 

[xrayphoton1]

Correct on all counts. EDIT: except my new car is (another) Model 3 Performance, not Y

The problem was that this math was not (is not) represented on the digital paperwork. And it was especially confusing because I forgot Tesla doesn't fool with your TX state tax, at all. But it was confirmed to me a few hours by a Tesla rep, with all the correct numbers. They did some wizardry on the back-end, and now the app correctly shows my upcoming amount to-be-financed with the trade-in reflected.

This was not the case when I made my original post.

At what point did the trade in credit show up? I applied for financing and they want me to accept terms but I don't see any taxes or trade in tax credits mentioned. Does that come later on the process?

 

[turns2stone]

At what point did the trade in credit show up? I applied for financing and they want me to accept terms but I don't see any taxes or trade in tax credits mentioned. Does that come later on the process?

I don't recall taxes ever showing up in the app. But the trade-in credit should, possibly after you accept the financing and the amounts are calculated.

 

[xrayphoton1]

I don't recall taxes ever showing up in the app. But the trade-in credit should, possibly after you accept the financing and the amounts are calculated.

Okay, I see the trade in credit but no tax credit anywhere. Is that normal? I have everything completed and I accepted their finance terms and submitted the final payment. The advisor acted like the tax credit is done later

 

[turns2stone]

Okay, I see the trade in credit but no tax credit anywhere. Is that normal? I have everything completed and I accepted their finance terms and submitted the final payment. The advisor acted like the tax credit is done later

The tax credit doesn't show up until they send you the registration paperwork that you take to the DMV (along with a check) to pay taxes on the car.

 

[EVer Hopeful]

and when you do the calculation, remember Texas sales tax is 6.25%

You might have got used to seeing a higher number, like up in Dallas we pay 8.25% because they add on a penny for Dart Light Rail and another penny for who-knows-what