New EV Tax credit: what happens if you sell after claiming $7,500 credit?

Forum|Forum|3 years ago
April 21, 2023
1 reply
1 view

Hello,

Avid TT user for decades. Love the product! However I have a question on tax implications of the EV tax credit.

I am considering purchasing an electric car and taking the $7,500 credit. I cannot find any information about what happens if I sell the car after taking possession and claiming the credit. Do I have to repay the credit? Where would I report the sale in TT?

Credits for New Clean Vehicles Purchased in 2023 or After | Internal Revenue Service (irs.gov)

I believe the form is 8936:

About Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit | Internal Revenue Service (irs.gov)

TurboTax Deluxe Online

Critter-3

Level 15

There are no limitations on how long you must own the car before you can sell it and the credit does NOT need to be repaid.

Opus 17

Level 15

However, you may have a taxable gain. The credit reduces your cost basis. For example, of the car cost $50,000 then your cost basis after the credit is $42,500. If you sold it as a used car for $45,000, for example, you have a taxable capital gain of $2,500 (selling price more than cost basis).

The cost basis adjustment may also have an effect on depreciation if you use the car for business.