Will you sell your new Model 3 for a profit?

[Chopr147]

If expectations are surpassed after the second reveal and the reservations exploded to like a million, then i'm sure some will try to sell their place in line. Which is selling the car because you would still have to take delivery yourself with Tesla only selling to the named res. holder. I will NOT be selling no matter what the possible profit may be!

 

[boBNunny]

I'm actually looking at how to do this once I take delivery. They missed when they said they would deliver, and now it will be Q3/2018. That and the 1st models delivered will only be the loaded ones. I feel misled, so I'm thinking of taking delivery, and then selling it for a few thousand over cost.

Thoughts?

 

[run-the-joules]

I'm actually looking at how to do this once I take delivery. They missed when they said they would deliver, and now it will be Q3/2018. That and the 1st models delivered will only be the loaded ones. I feel misled, so I'm thinking of taking delivery, and then selling it for a few thousand over cost.

Thoughts?

If you do it and don't declare the capital gains and/or if you claim the tax credit, you will have committed tax fraud and there's an incentive to snitch on you to the IRS in the form of a reward.

 

[tpatana]

In theory, everything I have is for sale. But no sane person would pay the amount it'd take for me to sell the M3.

 

[ACA Man]

People will find out no amount of profit would warrant a visit with IRS.

 

[ls7corvete]

I have a gentleman who want's to give me a little extra for my car. I need a car next year and can't wait until 2018 at best, then deal with service stations and high insurance - not worth it to me. I'll sell him the car and take the $3500 he is offering me.

3500$...not worth it. Everyone has their price, I doubt anyone is going to pay a premium for a 3 with used S/X's available.

 

[run-the-joules]

3500$...not worth it. Everyone has their price, I doubt anyone is going to pay a premium for a 3 with used S/X's available.

I'd pay a little extra to jump the queue for the 3 actually. I can afford an S or X, I just don't want one. I think the 3 is the better car, especially vs a *used* S or X.

 

[daniel]

Do you still get the tax credit even if you don't retain ownership of the vehicle?

If you buy the car with the intention of selling it, you lose the tax credit. If you sell it shortly after buying it, even if you intended to keep it and were just dissatisfied with it, there is a presumption that you bought it to sell. So, no, if you sell it too soon (and the IRS is the final arbiter of how soon is "too soon" unless you want to try to take the IRS to court) you lose the tax credit.

Not all of us pay sales tax. Right now I'm undecided between an S and a 3. If I end up getting an S I'll offer my 3 reservation to family members, but if they don't want it I expect it will be possible to make money off it.

Maybe will, maybe won't. The loss of the tax credit will mean that the buyer is effectively paying $7,500 more for the car even if you only charge him retail.

I'm actually looking at how to do this once I take delivery. They missed when they said they would deliver, and now it will be Q3/2018. That and the 1st models delivered will only be the loaded ones. I feel misled, so I'm thinking of taking delivery, and then selling it for a few thousand over cost.

Thoughts?

By Q3 of 2018 there will no longer be much of a market premium being offered. You might find a buyer if you have the car in Q1 of 2018.

There's no law against selling the car (unless as an employee you've signed some sort of contractual agreement against it) as long as you don't attempt tax fraud with the tax credit. But the loss of the tax credit does make the purchase much less attractive to the buyer.

I would sell mine if someone offered me a truly obscene amount of money. But that's not going to happen. Interestingly (but consistent with observed human nature) I would not pay any extra to get my Model 3 sooner than otherwise, and yet I would not sell it, once I have it, for any reasonable mark-up.

 

[Pinot.Noir]

If you buy the car with the intention of selling it, you lose the tax credit. If you sell it shortly after buying it, even if you intended to keep it and were just dissatisfied with it, there is a presumption that you bought it to sell. So, no, if you sell it too soon (and the IRS is the final arbiter of how soon is "too soon" unless you want to try to take the IRS to court) you lose the tax credit.

Everybody plans to sell their car at some point. I have two Model 3 reservations, and I "intend" to use the first one until AWD and cream/white seats come out. As long as I've used the first car for 6 months while waiting, I don't see the problem. I'm definitely using it in the interim.

 

[harry]

An item which always seems to come up in these "sell for a profit" threads is the assumption that everyone's situation is such that they would qualify for the federal tax "rebate". Some people (us, for example) never have enough tax obligation to make the rebate worthwhile. For someone in that position, selling to someone else in the same position, the tax consequences are nil.

 

[melindav]

An item which always seems to come up in these "sell for a profit" threads is the assumption that everyone's situation is such that they would qualify for the federal tax "rebate". Some people (us, for example) never have enough tax obligation to make the rebate worthwhile. For someone in that position, selling to someone else in the same position, the tax consequences are nil.

Credit, not “rebate”.

 

[daniel]

Everybody plans to sell their car at some point. I have two Model 3 reservations, and I "intend" to use the first one until AWD and cream/white seats come out. As long as I've used the first car for 6 months while waiting, I don't see the problem. I'm definitely using it in the interim.

There's a big, and obvious difference, between having the intention of selling your car eventually, and "buying for the purpose of re-selling it at a profit."

 

[harry]

There's a big, and obvious difference, between having the intention of selling your car eventually, and "buying for the purpose of re-selling it at a profit."

I don't know about this. When I buy stock during an IPO and then sell it later for a profit, is that somehow disreputable?

 

[run-the-joules]

For someone in that position, selling to someone else in the same position, the tax consequences are nil.

Not true. If you sell it for more than you purchased it for, you're liable for capital gains taxes.

 

[daniel]

I don't know about this. When I buy stock during an IPO and then sell it later for a profit, is that somehow disreputable?

There is no difference unless you try to get the tax credit which explicitly states that the tax credit does not apply if you bought the car for the purpose of reselling it. Congress created the tax credit with its conditions. One of the conditions is that you don't get the tax credit if you bought the car to re-sell it (which, as I noted above, is different than buying it knowing that some day you will sell it).

So, buy it and re-sell it if that's your choice. But in that case nobody qualifies for the tax credit. As long as you don't try to claim the credit, you're good, you've done nothing wrong.

To take the example of your stock scenario: You can buy that IPO (or any stock) and sell it whenever you like. But if you sell it a week after you bought it and then try to claim long-term capital gains on the profit, you've broken the law, because you are supposed to pay short-term capital gains if you only held the stock for a week. Congress, for good or for ill, decided to give the tax credit only to people who buy the car for their own use, and not to people who buy it to turn a quick profit by capitalizing on the deficit of supply vs. demand. And so that's the law.

 

[harry]

Not true. If you sell it for more than you purchased it for, you're liable for capital gains taxes.

You are right -- I was thinking only of the EV tax credit with respect to the buyer and seller.

One small item, tho -- if you sold soon after you bought, you would be taxed on short-term capital gains, which I believe is at ordinary income rates.

 

[ed94582]

How about this scenario? I buy it and drive it for say 8 months. And sell it for it for no profit. So no capital gains.
But 8 months is probably the sweet spot when the Model 3 is still in demand (given all the reservations) and all the Tax Credits will have been exhausted. Would someone pay MSRP for a 8 month old Model 3 and be able to get it immediately -- with say 10K miles. New ones would still be a year wait and they wouldn't be able to get a tax credit anyway. I think yes -- thoughts?

Would the tax credit be an issue? I guess the question is how long do you have to keep it before you sell it and put the tax credit at risk with the IRS. There are many Model S/Model X owners -- that probably sold their cars within 8 months -- would they all put their tax credits at risk with the IRS. How about if they sold the car after 18 months. Would that be a flag to the IRS? I guess the question is how long? Given all the relatively low mileage 2017 Model S and X for sale -- I would think those tax credits are safe.

 

[SageBrush]

How about this scenario? .

The IRS will be happy to answer your question after you buy the car, take the tax credit, and sell the car.
If they decide against you, penalties and fees will be tacked on to your bill.

 

[daniel]

The IRS will be happy to answer your question after you buy the car, take the tax credit, and sell the car.
If they decide against you, penalties and fees will be tacked on to your bill.

Actually, I've found the IRS to be very helpful with tax questions. Ask them how long you need to keep your car to qualify for the tax credit. I bet they'll answer the question. You don't have to wait until you have bought the car.

ETA: There may not be a specific time frame. Ask about your situation and what are the disqualifiers. (You won't have to identify yourself.)

 

[ed94582]

The IRS will be happy to answer your question after you buy the car, take the tax credit, and sell the car.
If they decide against you, penalties and fees will be tacked on to your bill.

Sure. The question is if you buy a Tesla (or any car with a tax credit) can you ever sell it and not have to pay penalties and fees.
The answer won't be NO -- you can never sell it. Then it becomes how long do you need to keep it before selling.

Plenty of people are selling or trading their 2017 Model X and Model S -- are they in danger of paying penalties on their tax credits?