WA State EV Sales Tax Exemption Updated

[seattlite2004]

How many in Wash got a 3/22 invite? I got one and configured. Hope I can get the sales tax exemption.

Per the following...if you get your car in 2.38 months....you should get the exception: https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/Misc/DOLVehicleCount.pdf

 

[RVD98072]

On a slightly related note, I ended up not ordering my Model 3 so I'm just holding onto my reservation. I picked up a Kia Soul EV last week on a 3 year lease. Total cost of ownership over 3 years is only $9k so I'm guessing that I'll try to get a Model 3 at that time (standard range + EAP for $40k is what I want). It'll be a later year car so hopefully Tesla will work out many of the first set of kinks and I'll also explore the used market at that time in case used M3s are in a decent state.

It was just a money thing. $50k to buy a model 3 today (after tax credit, etc.) vs $9k for a Soul EV now that I have to return after 3 years.

I don't know what will happen by then about the federal tax credit (assuming it will be all used up) or the WA state sales tax exemption but I'm going to assume none of it will be available and if anything is available then I'll be pleasantly surprised.

 

[PLUS EV]

I don't know what will happen by then about the federal tax credit (assuming it will be all used up) or the WA state sales tax exemption but I'm going to assume none of it will be available and if anything is available then I'll be pleasantly surprised.

Trump will be well into his 2nd term by then and will boldly take over the governorship in all 50 states banning EVs nationwide.

 

[ChrisH]

Trump will be well into his 2nd term by then and will boldly take over the governorship in all 50 states banning EVs nationwide.

Lol oh please no! The youth is going to be voting in record numbers to make sure the second term doesn’t happen right?!

 

[gearchruncher]

It's been asked twice in this thread, but I didn't see a resolution:

If you trade in a car, does this reduce the sales tax on a Model 3? If you buy a $50K model 3, and trade in a $18K car or more, do you pay no sales tax?

 

[ChrisH]

It's been asked twice in this thread, but I didn't see a resolution:

If you trade in a car, does this reduce the sales tax on a Model 3? If you buy a $50K model 3, and trade in a $18K car or more, do you pay no sales tax?

Good question. I think it’s on the full msrp but I’m not 100% on that.

 

[Daniellane]

It's been asked twice in this thread, but I didn't see a resolution:

If you trade in a car, does this reduce the sales tax on a Model 3? If you buy a $50K model 3, and trade in a $18K car or more, do you pay no sales tax?

I believe that to be the case. I should have the answer soon. Got my VIN yesterday at exactly the 4 week mark. Trading in our 2010 Prius with about 85,000 miles. Should be about an $8,000 trade in, so @ $55,000 -
$32,000 exemption - $8,000 trade-in leaves $15,000 taxable @ ~8.7% Tax should be ~$1,305.
@pilotSteve pleas chime in.
He already got the exemption on his Model 3. I don’t recall if he said he had a trade-in.

 

[wdolson]

I'm not 100% sure, but I believe the state sees the car purchase and trade in as two separate transactions, so you pay sales tax on the full price of the car. Though I believe if there are any "dealer" discounts, those are deducted before sales tax is applied, just like buying anything else that is one sale in a store.

I've never traded in a car. I've only bought two new cars and both times I sold my old car privately.

 

[whitex]

W

I'm not 100% sure, but I believe the state sees the car purchase and trade in as two separate transactions, so you pay sales tax on the full price of the car. Though I believe if there are any "dealer" discounts, those are deducted before sales tax is applied, just like buying anything else that is one sale in a store.

I've never traded in a car. I've only bought two new cars and both times I sold my old car privately.

In WA and in some other states the trade-in value is subtracted from the price of the car (whatever you negotiate), then you pay sales tax on the balance. Effectively you get sales-tax credit on your trade-in value. I think the question people are asking here is how does this work with the partial sales tax exemption for EV's - does the trade-in sales-tax credit reduce the sales tax exemption or not.

 

[Daniellane]

W

In WA and in some other states the trade-in value is subtracted from the price of the car (whatever you negotiate), then you pay sales tax on the balance. Effectively you get sales-tax credit on your trade-in value. I think the question people are asking here is how does this work with the partial sales tax exemption for EV's - does the trade-in sales-tax credit reduce the sales tax exemption or not.

Yep,
I can confirm that Sales tax is always net O of traded in Washington state of trade it in Washington state. I have taken advantage of this many times in the past.
The question you mention here is the one that is being asked.

 

[gearchruncher]

I'm no lawyer or CPA, but it should apply from what I see.

RCW 82.45.03 tells us what a selling price is:

(1) As used in this chapter, the term "selling price" means the true and fair value of the property conveyed. If property has been conveyed in an arm's length transaction between unrelated persons for a valuable consideration, a rebuttable presumption exists that the selling price is equal to the total consideration paid or contracted to be paid to the transferor, or to another for the transferor's benefit.

(3) As used in this section, "total consideration paid or contracted to be paid" includes money or anything of value, paid or delivered or contracted to be paid or delivered in return for the sale, and shall include the amount of any lien, mortgage, contract indebtedness, or other incumbrance, either given to secure the purchase price, or any part thereof, or remaining unpaid on such property at the time of sale.

Which makes it look like a trade in is just part of the way of paying for something. However, WAC 458-20-247 tells us that a trade in reduces the selling price:

Trade-ins, selling price, sellers' tax measures.

(1) Introduction. This section explains the measure of tax when a trade-in is included in the sale of tangible personal property. It explains how and when the retail sales or use tax exclusions apply and the recordkeeping requirements needed to document the transactions.
The value of "trade-in property of like kind" is excluded from the definitions of "selling price" in RCW 82.08.010 and the definition of "value of the article used" in RCW 82.12.010.

So, buy a $50K car, trade in a car for $20K, and your selling price is $30K.


Now, From the DOR:

The exemptions apply up to $32,000 of a vehicle’s:

• selling price; or
• the total lease payments made; or

The selling price in this case is $30K, so there should be no tax. Also, given that for a lease it's based on lease payments, you could easily trade in a vehicle to do a lease and pay much lower lease payments. So it feels like it should apply to a straight purchase with trade in as well.[/quote][/quote]

 

[Daniellane]

Yep,
I can confirm that Sales tax is always net O of traded in Washington state of trade it in Washington state. I have taken advantage of this many times in the past.
The question you mention here is the one that is being asked.

Sorry for the typo (darn autocorrect/IPhone dictation)
Should have said:
“net of trade-in”
not
“net O of traded in“

 

[jam_12]

It's been asked twice in this thread, but I didn't see a resolution:

If you trade in a car, does this reduce the sales tax on a Model 3? If you buy a $50K model 3, and trade in a $18K car or more, do you pay no sales tax?

There is a Special Notice called "Changes to Clean Alternative Fuel Vehicles and Plug-In Hybrids Sales/Use Tax Exemptions" (https://dor.wa.gov/legacy/Docs/Pubs/SpecialNotices/2016/sn_16_clean_alt_feul_hybrid.pdf) posted on the right side of the DOR Website (Incentive programs | Washington Department of Revenue).

The Special Notice reads like a FAQ, and your question has an answer:

Can trade-in amounts be deducted when calculating the selling price?
Yes, dealers should first deduct any trade-in amount negotiated with the buyer before applying the $32,000 sales tax exemption to the purchase.

So this should definitively answer your question as YES. Your trade-in amount will reduce the final selling price.

 

[gearchruncher]

@jam_12 Thanks so much! I missed that every time I looked.

 

[EVNow]

Per the following...if you get your car in 2.38 months....you should get the exception: https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/Misc/DOLVehicleCount.pdf

For some reason March is not updated. It would be interesting to see whether we get back to the usual 2 to 300 range or the last month low of 77.

 

[UZJedi]

For some reason March is not updated. It would be interesting to see whether we get back to the usual 2 to 300 range or the last month low of 77.

I would expect it to be more because of model 3 deliveries, but who knows. I was really surprised about February's numbers.

 

[ChadS]

I didn't get any solid numbers, but I heard Nissan was moving a lot of LEAFs in March, too. It seems chances are good we'll hit 7,500 in April, the notice will come on May 5, and the credit will last until the end of June. I would call that the most likely scenario.

However, with no numbers available yet, it is possible we already hit 7,500 in March. It's also possible that even if we don't hit it until April, notice could come as soon as we hit 7,500 without waiting until the 5th of May (the law is unclear on this, and it is unclear if the law would be followed to the letter anyway). Either way, the credit might disappear at the end of May. I wouldn't call that likely, but it is only 7 weeks away. And while Tesla says delivery happens in 3-6 weeks, they could change it at any time and some people in the tracker have already waited as long as 8 weeks. So, I ordered my Model 3 a couple of days ago just to be safe. I would have felt better about that decision if the numbers had been posted, but, well, here we are.

 

[gearchruncher]

It seems chances are good we'll hit 7,500 in April, the notice will come on May 5, and the credit will last until the end of June. I would call that the most likely scenario.

However, with no numbers available yet, it is possible we already hit 7,500 in March.

If we hit 7,500 in April the tax break ends in May, not June. The time is based on the month in which 7,500 was actually hit, not the month we become aware of it.

To hit 7,500 in March, they would have had to sell 700 EV's, 10X what they did in February and 3X the YTD average.

I'd say the chances are 90% we hit it in April and the break sunsets in May.

 

[mister yub]

If we hit 7,500 in April the tax break ends in May, not June. The time is based on the month in which 7,500 was actually hit, not the month we become aware of it.

To hit 7,500 in March, they would have had to sell 700 EV's, 10X what they did in February and 3X the YTD average.

I'd say the chances are 90% we hit it in April and the break sunsets in May.

Actually, according to RCW 82.08.809: Exemptions—Vehicles using clean alternative fuels and electric vehicles, exceptions—Quarterly transfers.

(6)(a) The exemption under this section expires, effective with sales of vehicles delivered to the buyer or leased vehicles for which the lease agreement was signed, after the last day of the calendar month immediately following the month the department receives notice from the department of licensing under subsection (7)(b) of this section. All leased vehicles that qualified for the exemption before the expiration of the exemption must continue to receive the exemption as described under subsection (1)(b) of this section on lease payments due through the remainder of the lease.

(7)(a) By the end of the fifth working day of each month, until the expiration of the exemption as described in subsection (6) of this section, the department of licensing must determine the cumulative number of qualifying vehicles titled on or after July 15, 2015, and provide notice of the cumulative number of these vehicles to the department.
(b) The department of licensing must notify the department once the cumulative number of qualifying vehicles titled in the state on or after July 15, 2015, equals or exceeds seven thousand five hundred.

That reads to me like if WA hits 7500 sold in April, DOL wouldn't notify of that until May 5th (7a). Thus, the tax break would end June 30th. Of course, if DOL notifies early for some reason, and notifies of 7500 in April, then the tax break would indeed end May 31.

 

[mister yub]

Since I can't edit comments... This was hidden in the quote, but my reading of the actual RCW is that if WA hits 7500 sold in April, DOL wouldn't notify of that until May 5th (7a). Thus, the tax break would end June 30th. Of course, if DOL notifies early for some reason, and notifies of 7500 in April, then the tax break would indeed end May 31.