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Will I get federal tax credit if I buy a Model 3 for my parents?

Discussion in 'Model 3' started by Bruin1996, Aug 1, 2017.

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  1. Bruin1996

    Bruin1996 Member

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    Hello everyone,

    I am not sure if this has already been answered but I would like to buy my parents a Model 3 (they want the base, lower range Model 3 with EAP/FSD and silver color) and I would like to know if I will be eligible for the federal tax credit? I am also probably going to buy myself an AWD/?P Model 3 for myself next year which I know may only qualify for reduced tax credit. Thanks in advance for any answers to this question.
     
  2. kev1n

    kev1n Member

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    cant you make the payment but put the car under your father/mothers name on the title?

    if not, worse case scenario, you can just have your name on the title with your either your farther/mother as well
     
    • Like x 1
  3. kengchang

    kengchang Member

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    You can't get the tax credit if it's not a new car even if it was not claimed. You have to be the original owner.
     
  4. Zaphod

    Zaphod Galaxy President (former)

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    Is the car going to registered in your name? If not, highly doubt you would be considered eligible for the credit.
     
  5. tga

    tga Supporting Member

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    1) Buy/register the car in your name, lend to you parents. Hope your insurance company doesn't find out and that they don't get in an accident.
    2) Try to get Tesla to list both you and your parents as buyers. Talk to your accountant to confirm one of the buyers can take the credit in this situation. Remove your name later (so you have no liability in an accident).
    3) Buy the car and lease to your parents. Then you can take the credit.
    Tesla probably won't let people do #2 - it's too close to a reservation transfer/sale.

    No, no, no. The instructions for form 8936 are very clear - only the first owner can take the credit ("The original use of the vehicle began with you"). If your tax guy said otherwise, you need a new tax guy.

    Because you bought 2 new EV's, one in 3/13 and one in 9/13.
     
    • Like x 1
  6. CmdrThor

    CmdrThor Active Member

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    You probably want to title and register the vehicle in your name and let them drive it.
     
  7. Akikiki

    Akikiki A'-Lo-HA ! y'all

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    tga, good advise. thanks for correcting me. I deleted my post since it was partly incorrect.
     
  8. Bruin1996

    Bruin1996 Member

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    Would it be possible for me to transfer the reservation to my parents and then pay for the car as a gift and have them as the owner. As they are retired but still have pension income, they could take the federal tax credit and perhaps get the CA clean air rebate and use that money to defray my costs to buy them a Model 3? Or, should I just have them buy it with their own money and repay them directly? I don't plan to take a loan.. we plan to pay cash for this car.
     
  9. WileyTheMan

    WileyTheMan Member

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    Just an FYI on the CA tax rebate: Low income households are now getting priority for the CA tax rebate, so you may not even qualify for that anymore. Those that don't qualify due to income get put on a waiting list if it gets funded again.
     
  10. cpa

    cpa Active Member

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    If Tesla Corporate will not allow your reservation to be transferred into your parents' name, then you will have to buy the car and gift it to them. I would be wary about gifting them the car immediately or soon after you acquire it as it would look to me that the entire transaction was a sham for you to receive the federal credit and any California rebates. I am not being accusatory here, but if a stranger were to see what you have done, a stranger might conclude this, and that is sort of the standard that the taxing authorities go by.

    I would think that it would be OK to add your folks to the title a couple of months after you buy it. You take the credit and any rebate. Then after 18 months or so, remove your name from the title.

    Just remember that the current gift tax exclusion per donor per donee is $14,000 per calendar year. So, you personally can give your folks $28,000 of cash or other property. If you are married, that amount doubles to $56,000. If you exceed these limits, a 709 must be filed with the IRS for the year that you made a "taxable gift" even though no gift tax would be due.

    Fight On!
     
  11. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Well-Known Member

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    You would have to be one of the Title-holders. And you can't simply buy it and then sell it to them: you cannot claim if you bought the car for resale.
     

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